Labor-Case Digests-Marquez-P7-9

LABOR 1 | JMM | CASE DIGESTS 2020 – TOPICS 7-9
TOPIC 7: PAYMENT OF WAGES
1. Congson vs. NLRC, 243 SCRA 260 [1995]
PETITIONER: DOMINICO C. CONGSON RESPONDENT: NLRC, The employees
LAW & PRINCIPLES:

WAGES; Petitioner’s practice of paying the private respondents the minimum wage by means of legal tender
combined with tuna liver and intestines runs counter to the provision of the Labor Code. The fact that said method
of paying the minimum wage was not only agreed upon by both parties in the employment agreement but even
expressly requested by private respondents, does not shield petitioner. Article 102 of the Labor Code is clear. Wages
shall be paid only by means of legal tender. The only instance when an employer is permitted to pay wages in forms
other than legal tender, that is, by checks or money order, is when the circumstances prescribed in the second
paragraph of Article 102 are present.
FACTS:
Private respondents were hired on various dates 3 by petitioner as regular piece-rate workers. They were uniformly
paid at a rate of P1.00 per tuna weighing thirty (30) to eighty (80) kilos per movement. They worked seven (7) days
a week.
During the first week of June 1990, petitioner notified his workers of his proposal to reduce the rate-per-tuna
movement due to the scarcity of tuna. Private respondents resisted petitioner's proposed rate reduction. When they
reported for work the next day, they were informed that they had been replaced by a new set of workers.
On June 1990, private respondents filed a case against petitioner before the NLRC for underpayment of wages (non-
compliance with Rep. Act Nos. 6640 and 6727) and non-payment of overtime pay, 13th month pay, holiday pay, rest
day pay, and five (5)-day service incentive leave pay; and for constructive dismissal.
With respect to their monetary claims, private respondents charged petitioner with violation of the minimum wage
law, alleging that with petitioner's rates and the scarcity of tuna catches, private respondents' average monthly
earnings each did not exceed ONE THOUSAND PESOS (P1,000.00). In addition to the amount of P1.00 per 'bariles'
per movement herein complainants get the intestines and liver of the tuna as part of their salary. That for every tuna
delivered, herein complainants extract at least three (3) kilos of intestines and liver. That the minimum prevailing
price of tuna intestine and liver in 1986 to 1990 range from P15.00 to P20.00/kilo. The value of the tuna intestine
and liver should be computed in arriving at the daily wage of herein complainants because the very essence of the
agreement between complainants and respondent is: complainants shall be paid only P1.00 per tuna per movement
BUT the intestines and liver of the tuna delivered shall go to the herein complainants. It should be noted that tuna
intestines and liver are easily disposed of in any public market. What they are after, in truth and in fact is the tuna
intestines and liver which they can easily convert into cash."
Quite clearly, petitioner admits that the P1.00-per-tuna movement is the actual wage rate applied to private
respondents as expressly agreed upon by both parties.
Petitioner further admits that private respondents were entitled to retrieve the tuna intestines and liver as part of their
compensation.
ISSUE: Whether the means of payment of wages is valid
RULING: The means of payment of wage is invalid.
The Labor Code expressly provides:
Page 1 of 52
"Article 102. Forms of Payment. — No employer shall pay the wages of an employee by means of,
promissory notes vouchers, coupons, tokens, tickets, chits, or any object other than legal tender, even
when expressly requested by the employee. Payment of wages by check or money order shall be allowed
when such manner of payment is customary on the date of effectivity of this Code, or is necessary because
as specified in appropriate regulations to be issued by the Secretary of Labor or as stipulated in a collective
bargaining agreement."
Undoubtedly, petitioner's practice of paying the private respondents the minimum wage by means of legal tender
combined with tuna liver and intestines runs counter to the above cited provision of the Labor Code. The fact that
said method of paying the minimum wage was not only agreed upon by both parties in the employment agreement
but even expressly requested by private respondents, does not shield petitioner. Article 102 of the Labor Code is
clear. Wages shall be paid only by means of legal tender. The only instance when an employer is permitted to pay
wages in forms other than legal tender, that is, by checks or money order, is when the circumstances prescribed in
the second paragraph of Article 102 are present.
2. North Davao Mining vs. NLRC, 254 SCRA 721 [1996]
PETITIONER: NORTH DAVAO MINING RESPONDENT: NATIONAL LABOR RELATIONS

CORPORATION and ASSET PRIVATIZATION TRUST COMMISSION, LABOR ARBITER ANTONIO M.
VILLANUEVA and WILFREDO GUILLEMA
LAW & PRINCIPLES: An employer whose business operations ceased due to serious business losses or financial
reverses is NOT obliged to pay separation pay to its employees separated by reason of such closure. (Art. 283;
Labor Code)
FACTS:
North Davao Mining Corporation was incorporated in 1974 as a 100% privately-owned company. As of December
31, 1990 the national government held 81.8% of the common stock and 100% of the preferred stock of said company.
In May 1992, North Davao completely ceased operations due to serious business reverses. When it ceased
operations, its remaining employees were separated and given the equivalent of 12.5 days’ pay for every year of
service, computed on their basic monthly pay.
However, it appears that, during the life of the petitioner corporation, from the beginning of its operations in 1981
until its closure in 1992, it had been giving separation pay equivalent to 30 days’ pay for every year of service.
Moreover, inasmuch as the region where North Davao operated was plagued by insurgency and other peace and
order problems, the employees had to collect their salaries at a bank in Tagum, Davao del Norte, some 58 kilometers
from their workplace and about 2 1/2 hours' travel time by public transportation; this arrangement lasted from 1981
up to 1990.
Subsequently, a complaint was filed with respondent LA by respondent Guillema and 271 other separated
employees for additional separation pay of 17.5 days for every year of service, additional pay for time spent in
collecting wages in a place other than the place of employment, and transportation expenses to reach the bank
where they can collect their wage notwithstanding the absence of evidence, among others.
ISSUES:
1. Whether or not an employer whose business operations ceased due to serious business losses or financial
reverses is obliged to pay separation pay to its employees separated by reason of such closure.
2. Whether or not time spent in collecting wages in a place other than the place of employment is compensable
notwithstanding that the same is done during official time.
3. Whether or not private respondents are entitled to transportation expenses in the absence of evidence that
these expenses were incurred.
RULING:
1. No. Art. 283 governs the grant of separation benefits "in case of closures or cessation of operation" of
business establishments "NOT due to serious business losses or financial reverses . . . ". Where, however,
the closure was due to business losses — as in the instant case, in which the aggregate losses amounted
Page 2 of 52
to over P20 billion — the Labor Code does not impose any obligation upon the employer to pay separation
benefits, for obvious reasons.
2. and 3. YES. From the evidence on record, we find that the hours spent by complainants in collecting
salaries at a bank in Tagum, Davao del Norte shall be considered compensable hours worked. Considering
further the distance between Amacan, Maco to Tagum which is 2 1/2 hours by travel and the risks in
commuting all the time in collecting complainants' salaries, would justify the granting of backwages
equivalent to two (2) days in a month as prayed for. Corollary to the above findings, and for equitable
reasons, we likewise hold respondents liable for the transportation expenses incurred by complainants at
P40.00 round trip fare during pay days.
Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides that:
Sec. 4. Place of payment. — (a) As a general rule, the place of payment shall be at or near the place of
undertaking. Payment in a place other than the workplace shall be permissible only under the following
circumstances:
(1) When payment cannot be effected at or near the place of work by reason of the deterioration of peace
and order conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or
other calamity rendering payment thereat impossible;
(2) When the employer provides free transportation to the employees back and forth; and
(3) Under any analogous circumstances; provided that the time spent by the employees in collecting their
wages shall be considered as compensable hours worked.
NOTES: It will be petitioners' (the employer) burden or duty to present evidence of compliance of the law on labor
standards, rather than for private respondents to prove that they were not paid/provided by petitioners of their
backwages and transportation expenses.
3. Heirs of Sara Lee vs. Rey, G.R. No. 149013, Aug. 31, 2006
PETITIONER: House of Sara Lee RESPONDENT: Cynthia F. Rey
The House of Sara Lee (petitioner) is engaged in the direct selling of a variety of Held the position of Credit
product lines for men and women, including cosmetics, intimate apparels, Administration Supervisor or
perfumes, ready to wear clothes and other novelty items, through its various CAS at the Cagayan de Oro City
outlets nationwide.In the pursuit of its business, the petitioner engages and branch of the petitioner.
contracts with dealers to sell the aforementioned merchandise. These dealers,
known either as "Independent Business Managers" (IBMs). Under existing
company policy, the dealers must remit to the petitioner the proceeds of their
sales within a designated credit period, which would either be 38 days for IGSs
or 52 days for IBMs, counted from the day the said dealers acquired the
merchandise from the petitioner. To discourage late remittances, the petitioner
imposes a "Credit Administration Charge," or simply, a penalty charge, on the
value of the unremitted payment. Additionally, if the dealer concerned has
overdue payments or is said to be in "default," he or she cannot purchase
additional products from the petitioner.
LAW & PRINCIPLES:
Rank-and-file employees are not entitled to thirteenth-month pay.
FACTS:
The case originated from a Complaint for illegal dismissal.
Page 3 of 52
While respondent was still working in Butuan City, she allegedly instructed the Accounts Receivable Clerk of the
Cagayan de Oro outlet, a certain Ms. Magi Caroline Mendoza, to change the credit term of one of the IBMs of the
petitioner, a certain Ms. Mariam Rey-Petilla, who happens to be respondent’s sister-in-law, from the 52-day limit to
an “unauthorized” term of 60 days.
As a consequence of the discovery of the foregoing alleged “anomalous practice” of extending the credit terms of
certain Independent Business Managers (IBM), management undertook an audit of the Cagayan de Oro City and
Butuan City branches.
During the process, the petitioner alleges, respondent was interviewed by the auditors before whom she again openly
admitted her infractions.
On the basis of the hearing, the alleged voluntary admissions of respondent, and the findings of the auditor’s report,
the petitioner, on June 25, 1996, formally dismissed the respondent for breach of trust and confidence.
ISSUES: Whether or not respondent was validly dismissed and whether or not he is entitled to 13th month pay.
RULING:
Respondent was validly dismissed. The Court cannot accept respondent’s assertion that she was never apprised
of the company policies with respect to the allowable credit terms. As Credit Administration Supervisor, the
respondent cannot feign ignorance of the irregularity as she was sufficiently aware that the credit extensions she
made were beyond acceptable limits. In other words, respondent was aware of the financial implications of her
extension of the credit terms, especially the outcome where the consideration of late remittances, after the extension,
would unduly inflate the sales commissions.
Villagracia even reprimanded Ms. Mendoza for carrying out respondent’s instructions. As a consequence, higher
management immediately undertook an audit of the Cagayan de Oro and Butuan City branches where the
respondent had been assigned. And, as a consequence, an Auditor’s Report was issued, expressly finding the
respondent guilty of violating company policy. Respondent was again directed by the higher authorities to explain,
in more detail, the anomalies uncovered by the audit. The foregoing activities negate the suggestion that
management tolerated respondent’s unauthorized extension of credit terms.
The award of 13th month pay must be deleted. Respondent is not a rank-and-file employee and is, therefore, not
entitled to thirteenth-month pay.
However, the NLRC and the CA are correct in refusing to award 14th and 15th month pay as well as the “monthly
salary increase of 10 percent per year for two years based on her latest salary rate.” The respondent must show
that these benefits are due to her as a matter of right. The rule in these cases is, she who alleges, not she who
denies, must prove. Mere allegations by the respondent do not suffice in the absence of proof supporting the same.
NOTES:
TOPIC 8: CONDITIONS OF EMPLOYMENT
1. San Juan De Dios Hospital v. NLRC, G.R. No. 126383, Nov. 28, 1997
Page 4 of 52
PETITIONER: San Juan De Dios Hospital Employees RESPONDENT: National Labor Relations
Association et. al. Commission and San Juan De Dios Hospital
LAW & PRINCIPLES:

Article 83 of the Labor Code
"Art. 83. Normal Hours of Work. — The normal hours of work of any employee shall not exceed eight (8) hours a
day.
"Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and
clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for
five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such
personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled to an additional
compensation of at least thirty per cent (30%) of their regular wage for work on the sixth day. For purposes of this
Article, "health personnel" shall include: resident physicians, nurses, nutritionists, dietitians, pharmacists, social
workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital
or clinic personnel."
FACTS:
● Petitioners are the rank-and-file employee-union officers and members of San Juan De Dios Hospital
Employees Association, sent a four page letter with attached support signatures requesting and pleading
for the expeditious implementation and payment by Juan De Dios Hospital of the '40-HOURS/5-DAY
WORKWEEK' with compensable weekly two days off provided for by R.A. 5901as clarified for enforcement
by the Secretary of Labor's Policy Instructions No. 54.
● Respondent hospital failed to give a favorable response; thus, petitioners filed a complaint regarding their
"claims for statutory benefits under the above-cited law and policy issuance.
● The Labor Arbiter dismissed the complaint. Petitioners appealed before public respondent NLRC which
affirmed the Labor Arbiter's decision. Petitioners' subsequent motion for reconsideration was denied;
hence, this petition under Rule 65 of the Rules of Court ascribing grave abuse of discretion on the part of
NLRC in concluding that Policy Instructions No. 54 "proceeds from a wrong interpretation of RA 5901" 5
and Article 83 of the Labor Code.
Franklin Drilon’s Interpretation:

● The evident intention of RA 5901 is to reduce the number of hospital personnel, considering the nature of
their work and at the same time guarantee the payment to them of a full weekly wage for seven days.
● The Labor Code in its Article 83 adopts and incorporates the basic provisions of RA 5901 and retains its
spirit and intent which is to shorten the workweek of covered hospital personnel and at the same time
assure them of a full weekly wage.
● Consistent with such spirit and intent, it is the position of the Department that personnel in subject hospital
and clinics are entitled to a full weekly wage for seven (7) days if they have completed the 40-hour/5-day
workweek in any given workweek. All enforcement and adjudicatory agencies of this Department shall be
guided by this issuance in the disposition of cases involving the personnel of covered hospitals and clinics.
ARGUMENTS SECTION (Please indicate who had the ‘COUNTER-ARGUMENT’)
PETITIONER: San Juan De Dios Hospital Employees RESPONDENT:

Association San Juan De Dios Hospital
- Pleaded for the expeditious implementation and - failed to give a favorable response
payment by Juan De Dios Hospital of the '40- NLRC
HOURS/5-DAY WORKWEEK' with - Affirmed the LA’s decision of dismissing the
compensable weekly two days off provided for by complaint
R.A. 5901as clarified for enforcement by the
Secretary of Labor's Policy Instructions No. 54.
Counter -argument for unfavorable response of

Respondent: filed a complaint regarding their "claims for
statutory benefits under the above-cited law and policy
issuance.
Page 5 of 52
ISSUES: Whether or not the Policy Instructions No. 54 issued by then Labor Secretary (now Senator)
Franklin M. Drilon is valid.
RULING:
The interpretation of Labor Secretary Drilon is not valid.
● Policy Instruction No. 54 relies and purports to implement Republic Act No. 5901, otherwise known as "An
Act Prescribing Forty Hours A Week Of Labor For Government and Private Hospitals Or Clinic Personnel".
Reliance on Republic Act No. 5901, however, is misplaced for the said statute.
● Only Art. 83 of the Labor Code which appears to have substantially incorporated or reproduced the basic
provisions of Republic Act No. 5901 may support Policy Instructions No. 54 on which the latter's validity
may be gauged.
● A cursory reading of Article 83 of the Labor Code betrays petitioners' position that "hospital employees"
are entitled to "a full weekly salary with paid two days' off if they have completed the 40-hour/5-day
workweek".
● What Article 83 merely provides are:
(1) the regular office hour of eight hours a day, five days per week for health personnel, and (2)
where the exigencies of service require that health personnel work for six days or forty-eight hours
then such health personnel shall be entitled to an additional compensation of at least thirty percent
of their regular wage for work on the sixth day.
● There is nothing in the law that supports then Secretary of Labor's assertion that "personnel in subject
hospitals and clinics are entitled to a full weekly wage for seven days if they have completed the 40-hour/5-
day workweek in any given workweek".
● The Secretary of Labor exceeded his authority by including a two days off with pay in contravention of the
clear mandate of the statute. Administrative interpretation of the law, we reiterate, is at best merely
advisory, and the Court will not hesitate to strike down an administrative interpretation that deviates
from the provision of the statute.
● In fact, the Explanatory Note of House Bill No. 16630 (later passed into law as RA No. 5901) explicitly
states that the bill's sole purpose is to shorten the working hours of health personnel and not to
dole out a two days off with pay.
● Policy Instructions No. 54 being inconsistent with and repugnant to the provision of Article 83 of the Labor
Code, as well as to Republic Act No. 5901, should be, as it is hereby, declared void.
NOTES:
2. Sime Darby Pilipinas Inc. v. NLRC, G.R. No. 148021, Apr. 15, 1998
PETITIONER: Sime Darby Pilipinas Inc. RESPONDENT: NLRC and Sime Darby Salaried
- is engaged in the manufacture of automotive Employees Association (ALU-TUCP)
tires, tubes and other rubber products - is an association of monthly salaried employees
of petitioner at its Marikina factory
LAW & PRINCIPLES:

● The right to fix the work schedules of the employees rests principally on their employer.
FACTS:
● Prior to the present controversy, all company factory workers in Marikina including members of private
respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30-minute paid "on call" lunch break.
● Petitioner issued a memorandum to all factory — based employees advising all its monthly salaried
employees in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance Department
working on shifts, a change in work schedule effective 14 September.
● Since private respondent felt affected adversely by the change in the work schedule and discontinuance of
the 30-minute paid "on call" lunch break, it filed on behalf of its members a complaint with the Labor Arbiter
Page 6 of 52
for unfair labor practice, discrimination and evasion of liability pursuant to the resolution of this Court in
Sime Darby International Tire Co., Inc. v. NLRC.
● Labor Arbiter dismissed the complaint on the ground that the change in the work schedule and the
elimination of the 30-minute paid lunch break of the factory workers constituted a valid exercise of
management prerogative and that the new work schedule, break time and one-hour lunch break did not
have the effect of diminishing the benefits granted to factory workers as the working time did not exceed
eight hours.
● LA held that the factory workers would be unjustly enriched if they continued to be paid during their lunch
break even if they were no longer "on call" or required to work during the break.
● Private respondent appealed to respondent NLRC which sustained the Labor Arbiter and dismissed the
appeal. Upon motion for reconsideration by private respondent, the NLRC reversed its earlier decision.
● The Office of the Solicitor General filed in lieu of comment a manifestation and motion recommending that
the petition be granted, alleging that the memorandum which contained the new work schedule was not
discriminatory of the union members nor did it constitute unfair labor practice on the part of petitioner.
ARGUMENTS SECTION
PETITIONER: Sime Darby Pilipinas Inc. (WON) RESPONDENT: Sime Darby Salaried Employees
Association (ALU-TUCP)(LOST)
- felt affected adversely by the change in the
work schedule and discontinuance of the 30-
minute paid "on call" lunch break
NLRC’s ground for reversal of its earlier decision:
- petitioner committed unfair labor practice in
the implementation of the change in the work
schedule of its employees
- there was diminution of benefits when the 30-
minute paid lunch break was eliminated
- ignoring petitioner's inherent management
prerogative of determining and fixing the work
schedule of its employees which is expressly
recognized in the collective bargaining
agreement between petitioner and private
respondent
ISSUES: Whether or not the memorandum discontinuing the 30-minute paid “on call” lunch break
constituted unfair labor practice and diminution of benefits (NO)
RULING:
● The SC ruled in favor of the petitioner. The right to fix the work schedules of the employees rests
principally on their employer.
● In the instant case petitioner, as the employer, cites as reason for the adjustment the efficient conduct of
its business operations and its improved production. It rationalizes that while the old work schedule included
a 30-minute paid lunch break, the employees could be called upon to do jobs during that period as they
were "on call." Even if denominated as lunch break, this period could very well be considered as working
time because the factory employees were required to work if necessary and were paid accordingly for
working.
● With the new work schedule, the employees are now given a one-hour lunch break without any interruption
from their employer. For a full one-hour undisturbed lunch break, the employees can freely and effectively
use this hour not only for eating but also for their rest and comfort which are conducive to more efficiency
and better performance in their work.
● Since the employees are no longer required to work during this one-hour lunch break, there is no more
need for them to be compensated for this period. We agree with the Labor Arbiter that the new work
schedule fully complies with the daily work period of eight (8) hours without violating the Labor
Code. Besides, the new schedule applies to all employees in the factory similarly situated whether
they are union members or not.
● The case before us does not involve discrimination of employees but only the issue of whether the change
of work schedule, which management deems necessary to increase production, constitutes unfair labor
practice.
Page 7 of 52
● The change with regard to working time is made to apply to all factory employees engaged in the same line
of work whether or not they are members of private respondent union. Hence, it cannot be said that the
new scheme adopted by management prejudices the right of private respondent to self-
organization.
NOTES:
Management is free to regulate, according to its own discretion and judgment, all aspects of employment,
including hiring, work assignments, working methods, time, place and manner of work, processes to be followed,
supervision of workers, working regulations, transfer of employees, work supervision, lay off of workers and
discipline, dismissal and recall of workers.
Further, management retains the prerogative, whenever exigencies of the service so require, to change the
working hours of its employees. So long as such prerogative is exercised in good faith for the advancement of
the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under
special laws or under valid agreements.
While the Constitution is committed to the policy of social justice and the protection of the working class, it should
not be supposed that every dispute will be automatically decided in favor of labor. Management also has
rights which, as such, are entitled to respect and enforcement in the interest of simple fair play.
3. PAL V. NLRC, G.R. No. 132805. February 2, 1999 (ANDRIN)
PETITIONER: PAL RESPONDENT: NATIONAL LABOR RELATIONS

COMMISSION, LABOR ARBITER ROMULUS
PROTACIO and DR. HERMINIO A. FABROS
Private respondent was employed as flight surgeon at
PAL. He was assigned at the PAL Medical Clinic at
Nichols and was on duty from 4:00 in the afternoon until
12:00 midnight.
LAW & PRINCIPLES:
Articles 83 and 85 of the Labor Code: ARTICLE 83. Normal hours of work. — The normal hours of work of any
employee shall not exceed eight (8) hours a day. Health personnel in cities and municipalities with a population of
at least one million (1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold
regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the
exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case
they shall be entitled to an additional compensation of at least thirty per cent (30%) of their regular wage for work on
the sixth day. For purposes of this Article, "health personnel" shall include: resident physicians, nurses, nutritionists,
dieticians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives,
attendants and all other hospital or clinic personnel.
ARTICLE 85. Meal periods. — Subject to such regulations as the Secretary of Labor may prescribe, it shall be the
duty of every employer to give his employees not less than sixty (60) minutes time-off for their regular meals.
Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states: SECTION 7.
Meal and Rest Periods. — Every employer shall give his employees, regardless of sex, not less than one (1) hour
time-off for regular meals, except in the following cases when a meal period of not less than twenty (20) minutes
may be given by the employer provided that such shorter meal period is credited as compensable hours worked of
the employee; (a) Where the work is non-manual work in nature or does not involve strenuous physical exertion; (b)
Where the establishment regularly operates not less than sixteen hours a day; (c) In cases of actual or impending
emergencies or there is urgent work to be performed on machineries, equipment or installations to avoid serious
loss which the employer would otherwise suffer; and (d) Where the work is necessary to prevent serious loss of
perishable goods. Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as
compensable working time
Page 8 of 52
FACTS:
● 7:00 PM – Dr. Fabros left to have dinner in his house about a 5-minute drive. 5 mins later there was an
emergency call from PAL Cargo Services where one of the employees had a heart attack.
○ Nurse called him. Patient arrived but was rushed to the hospital. When Dr Fabros arrived, no one
was there. Patient died the next day.
○ PAL Med Director conducted investigation upon learning.
○ CFR (Chief Flight Surgeon) required respondent why no disciplinary sanction should be taken
against him.
● Explanation:
○ entitled to a thirty-minute meal break
○ he immediately left his residence upon being informed
○ Mr. Eusebio panicked and brought the patient to the hospital without waiting for him.
● Finding it unacceptable. Management charged Dr. Fabros with abandonment of post while on duty. And
given 10 days to explain his self.
○ Dr. Fabros reiterated his assertions.
○ denied that he abandoned his post.
○ he only left the clinic to have his dinner at home.
○ he returned to the clinic at 7:51 in the evening upon being informed of the emergency.
● Dr. Fabros was suspended for 3 months.
○ Filed complaint for illegal suspension.
● RULINGS:
○ Labor Arbiter – Dr. Fabros favor. Nullified suspension. Awarded 500k moral damages.
● NLRC – Petition dismissed. Labor arbiter affirmed.
PETITIONER: RESPONDENT: NO C-A
1. GADALEJ – on nullifying 3 month suspension

despite the fact Dr. Fabros is warranted of
disciplinary action.
2. GADALEJ – on moral damages for having no
formal hearing, absence of proof petitioner acted
in bad faith, award is highly irregular.
CONTENTIONS:
3. Dr. Fabros is a full-time employee. Thus, he is

obliged to stay in the company premises for not
less than 8 hours. Hence, no leaving even for
meals.
ISSUES:
WON ERR on suspension and moral damages?
WON Dr. Fabros is required to stay in the company premises even during meals
RULING:
1. Err only as to the moral damages award.
2. No. Based on Art. 83 and 85 of LRC, and Section 7, Rule I, Book III of the Omnibus Rules Implementing
the Labor Code. (Please see law section). Thus, the eight-hour work period does not include the meal
break. Nowhere in the law may it be inferred that employees must take their meals within the company
premises. Employees are not prohibited from going out of the premises as long as they return to their posts
on time. Private respondent’s act, therefore, of going home to take his dinner does not constitute
abandonment.
NOTES: NA
Page 9 of 52
4. LINTON VS. HELLERA ET. AL, G.R. No. 163147 October 10, 2007 (ANDRIN)
PETITIONER: RESPONDENT: 68 workers of Linton illegally dismissed

Linton is a domestic corporation engaged in the business
of importation, wholesale, retail and fabrication of steel
and its by-products. Petitioner Desiree Ong is Linton’s
vice president.
LAW & PRINCIPLES:

● Article 286 applies only when there is a bona fide suspension of the employer’s operation of a business or
undertaking for a period not exceeding six (6) months.
● On the other hand, for retrenchment to be justified, any claim of actual or potential business losses must
satisfy the following standards: (1) the losses incurred are substantial and not de minimis; (2) the losses
are actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be effective
in preventing the expected losses; and (4) the alleged losses, if already incurred, or the expected imminent
losses sought to be forestalled, are proven by sufficient and convincing evidence.
FACTS:
● December 1997 – Linton issued a memo addressed to employees.
○ Memo states a decision to suspend operations from Dec-Jan 1998 due to crisis.
○ Submitted report to DOLE regarding temporary closure.
○ Resumes Jan 6 1998.
● December 7 1998 – Linton issued another memo
○ Memo informs that effective Jan 12 a new compressed workweek - each worker would be working
on a rotation basis for three working days only instead for six days a week.
○ Linton submitted an establishment termination report concerning workers rotation.
○ Proceeded with implementation without DOLE approval.
● 68 aggrieved workers filed a Complaint for illegal reduction of workdays.
● RULINGS:
○ Labor Arbiter – Linton is guilty of illegal reduction of work hours.
○ NLRC – Labor Arbiter decision reversed. Held that an employer has the prerogative to control all
aspects of employment in its business organization, including the supervision of workers, work
regulation, lay-off of workers, dismissal and recall of workers.
○ CA – NLRC decision reversed. Linton had failed to observe the substantive and procedural
requirements of a valid dismissal or retrenchment to avoid or minimize business losses since it
had failed to present adequate, credible and persuasive evidence that it was indeed suffering, or
would imminently suffer, from drastic business losses.
PETITIONER: RESPONDENT:
1. CA erred when it held that the reduction of At the Labor Arbiter: pointed out that Linton
workdays is equivalent to constructive implemented the reduction of work hours without
dismissal. Since: observing Article 283 of the Labor Code, which required
a. no reduction of salary but instead only submission of notice thereof to DOLE one month prior to
a reduction of working days from six to the implementation of reduction of personnel, since
three days per week. Linton filed only the establishment termination report
b. the reduction of workdays, while not enacting the compressed workweek on the very date of
expressly covered by any of the its implementation.
provisions of the Labor Code, is
analogous to the situation
contemplated in Article 286 because
the company implemented the
reduction of workdays to address its
financial losses
Page 10 of 52
c. since there was no retrenchment, the

one-month notice requirement under
Article 283 of the Labor Code is not
applicable.
ISSUES:
WON there was an illegal reduction of work when Linton implemented a compressed workweek by reducing from
six to three the number of working days with the employees working on a rotation basis
RULING:
The compressed workweek arrangement was unjustified and illegal.1âwphi1 Thus, petitioners
committed illegal reduction of work hours.
The court notes that:
● Management has the prerogative to come up with measures to ensure profitability or loss minimization.
However, such privilege is not absolute. Management prerogative must be exercised in good faith and
with due regard to the rights of labor.
● Financial losses must be shown before a company can validly opt to reduce the work hours of its
employees. However, to date, no definite guidelines have yet been set to determine whether the
alleged losses are sufficient to justify the reduction of work hours.
● Article 286 applies only when there is a bona fide suspension of the employer’s operation of a
business or undertaking for a period not exceeding six (6) months.
● On the other hand, for retrenchment to be justified, any claim of actual or potential business losses
must satisfy the following standards: (1) the losses incurred are substantial and not de minimis; (2) the
losses are actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be
effective in preventing the expected losses; and (4) the alleged losses, if already incurred, or the expected
imminent losses sought to be forestalled, are proven by sufficient and convincing evidence.
Records show that Linton continued its business operations during the effectivity of the compressed workweek,
which spanned more than the maximum period. Linton failed to comply with the retrenchment standards and
suspension of work standard, if the standards set in determining the justifiability of financial losses under Article
283 (i.e., retrenchment) or Article 286 (i.e., suspension of work) of the Labor Code were to be considered.
NOTES:
In Philippine Graphic Arts, Inc. v. NLRC, the Court upheld for the validity of the reduction of working hours, taking
into consideration the following: the arrangement was temporary, it was a more humane solution instead of a
retrenchment of personnel, there was notice and consultations with the workers and supervisors, a consensus were
reached on how to deal with deteriorating economic conditions and it was sufficiently proven that the company was
suffering from losses. The Bureau of Working Conditions of the DOLE, moreover, released a bulletin providing for in
determining when an employer can validly reduce the regular number of working days. The said bulletin states that
a reduction of the number of regular working days is valid where the arrangement is resorted to by the employer to
prevent serious losses due to causes beyond his control, such as when there is a substantial slump in the demand
for his goods or services or when there is lack of raw materials. Although the bulletin stands more as a set of directory
guidelines than a binding set of implementing rules, it has one main consideration, consistent with the ruling in
Philippine Graphic Arts Inc., in determining the validity of reduction of working hours—that the company was suffering
from losses.
5. Bisig Manggagawa sa Tryco vs. NLRC, G.R. No. 151309. October 15, 2008 (Odchigue)
PETITIONER: BISIG MANGGAGAWA SA TRYCO RESPONDENT: NATIONAL LABOR RELATIONS

and/or FRANCISCO SIQUIG, as Union President, COMMISSION, TRYCO PHARMA CORPORATION,
JOSELITO LARIÑO, VIVENCIO B. BARTE, and/or WILFREDO C. RIVERA (WON)
SATURNINO EGERA and SIMPLICIO AYA-AY (LOST)
LAW & PRINCIPLES:
Department of Labor and Employment Department Order (D.O.) No. 21 Series of 1990, Guidelines on the
Implementation of Compressed Workweek.
Page 11 of 52
D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits that the employees will derive from
the adoption of a compressed workweek scheme, thus:
The compressed workweek scheme was originally conceived for establishments wishing to save on energy costs,
promote greater work efficiency and lower the rate of employee absenteeism, among others. Workers favor the
scheme considering that it would mean savings on the increasing cost of transportation fares for at least one (1) day
a week; savings on meal and snack expenses; longer weekends, or an additional 52 off-days a year, that can be
devoted to rest, leisure, family responsibilities, studies and other personal matters, and that it will spare them for at
least another day in a week from certain inconveniences that are the normal incidents of employment, such as
commuting to and from the workplace, travel time spent, exposure to dust and motor vehicle fumes, dressing up for
work, etc. Thus, under this scheme, the generally observed workweek of six (6) days is shortened to five (5) days
but prolonging the working hours from Monday to Friday without the employer being obliged for pay overtime
premium compensation for work performed in excess of eight (8) hours on weekdays, in exchange for the benefits
abovecited that will accrue to the employees.
FACTS:
● Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its principal office is
located in Caloocan City.
● Petitioners are regular employees assigned to the Production Dept. and members of Bisig Manggagawa
sa Tryco (BMT), the exclusive bargaining representative of the rank-and-file employees.
● May 20, 1996 – effectivity of a compressed workweek schedule signed by the petitioners and the company.
● Tryco informed the Bureau of Working Conditions of the Department of Labor and Employment of the
implementation of a compressed workweek in the company.
● January 1997 - BMT and Tryco negotiated for the renewal of their collective bargaining agreement (CBA)
but failed to arrive at a new agreement.
● March 26, 1997 – Tryco received a letter from the Bureau of Animal Industry of the Department of
Agriculture reminding it that its production should be conducted in San Rafael, Bulacan, not in Caloocan
City.
● Tryco issued memorandum to petitioners to report to the company's plant site in Bulacan but they refused
to obey.
● May 26,1997 – BMT declared a strike; opposed the transfer of its members to San Rafael, Bulacan,
contending that it constitutes unfair labor practice.
● August 1997 - petitioners filed their separate complaints for illegal dismissal, underpayment of wages,
nonpayment of overtime pay and service incentive leave, and refusal to bargain against Tryco and its
President, Wilfredo C. Rivera.
● (see petitioner and respondent’s arguments)
LA RULING: (February 27, 1998) - dismissed the case for lack of merit
● the transfer of the petitioners would not paralyze or render the union ineffective for the following reasons:
○ complainants are not members of the negotiating panel
○ the transfer was made pursuant to the directive of the Department of Agriculture.
● denied the money claims, ratiocinating that the nonpayment of wages was justified because the petitioners
did not render work from May 26 to 31, 1997;
● no overtime pay due to the compressed workweek agreement
● no service incentive leave pay because employees are already enjoying vacation leave with pay for at least
five days.
● As for the claim of noncompliance with Wage Order No. 4, the Labor Arbiter held that the issue should be
left to the grievance machinery or voluntary arbitrator.
NLRC RULING: (October 29, 1999) - affirmed the Labor Arbiter's Decision
CA RULING: (July 24, 2001) - dismissed the petition for certiorari
● transfer order was a management prerogative not amounting to a constructive dismissal or an unfair labor
practice.
● sustained the enforceability of the MOA, particularly the waiver of overtime pay in light of this Court's rulings
upholding a waiver of benefits in exchange of other valuable privileges
Page 12 of 52
● The CBA negotiations failed - petitioners alleged ● respondents averred that the petitioners were
that the company acted in bad faith when it sent not dismissed but they refused to comply with
representatives without authority to bind the the management's directive for them to report
company. to the company's plant in San Rafael, Bulacan.
● They added that the management transferred ● failure to arrive at an agreement was due to
petitioners from Caloocan to San Rafael, the stubbornness of the union panel.
Bulacan to paralyze the union. ● long before the start of the negotiations, the
● Prayer: to pay them their salaries from May 26 to company had already been planning to
31, 1997, service incentive leave, and overtime decongest the Caloocan office to comply with
pay, and to implement Wage Order No. the government policy to shift the
concentration of manufacturing activities from
the metropolis to the countryside – but the
decision to transfer was caused by the letter of
the Bureau of Animal Industry.
ISSUES:
1. W/N transfer orders amount to a constructive dismissal.

2. W/N transfer orders amounted to unfair labor practice.
RULING:
1. On petitioner’s contention that the letter of the Bureau of Animal Industry is not credible because it is not
authenticated and a ploy by the respondents to give them an excuse to effect a massive transfer of
employees – the Court does not agree. Absent any evidence, the allegation is not only highly irresponsible
but is grossly unfair to the government agency concerned; this is a baseless accusation.
The decision to transfer the production employees is within the scope of Tryco’s inherent right to
control and manage its enterprise effectively. While the law is solicitous of the welfare of employees, it
must also protect the right of an employer to exercise what are clearly management prerogatives.
The free will of management to conduct its own business affairs to achieve its purpose cannot be
denied.
This prerogative extends to the management's right to regulate, according to its own discretion and
judgment, all aspects of employment, including the freedom to transfer and reassign employees according
to the requirements of its business. Thus, the consequent transfer of Tryco's personnel, assigned to the
Production Department was well within the scope of its management prerogative – it does not amount to a
constructive dismissal.
When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does
not involve a demotion in rank or diminution of salaries, benefits, and other privileges, the employee
may not complain that it amounts to a constructive dismissal. However, the employer has the
burden of proving that the transfer of an employee is for valid and legitimate grounds. The employer
must show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor
does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. In
this case, the petitioners basis of objection is that the transfer causes inconvenience and added travel
expenses.
The Court has previously declared that mere incidental inconvenience is not sufficient to warrant a
claim of constructive dismissal. Objection to a transfer that is grounded solely upon the personal
inconvenience or hardship that will be caused to the employee by reason of the transfer is not a valid reason
to disobey an order of transfer.
Page 13 of 52
2. On petitioner’s contention that transfer orders amounted to unfair labor practice since it would paralyze and
render the union ineffective – the Court does not agree. The union was not deprived of the membership
of the petitioners whose work assignments were only transferred to another location - thus it does
not amount to unfair labor practice.
More importantly, there was no showing or any indication that the transfer orders were motivated
by an intention to interfere with the petitioners' right to organize. Unfair labor practice refers to acts
that violate the workers' right to organize. With the exception of Article 248 (f) of the Labor Code of the
Philippines, the prohibited acts are related to the workers' right to self-organization and to the observance
of a CBA. Without that element, the acts, no matter how unfair, are not unfair labor practices.
Finally, we do not agree with the petitioners' assertion that the MOA is not enforceable as it is contrary to
law. The MOA is enforceable and binding against the petitioners. Where it is shown that the person
making the waiver did so voluntarily, with full understanding of what he was doing, and the
consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a
valid and binding undertaking.
Moreover, the adoption of a compressed workweek scheme in the company will help temper any
inconvenience that will be caused the petitioners by their transfer to a farther workplace. Notably, the MOA
complied with the following conditions set by the DOLE, under D.O. No. 21, to protect the interest of the
employees in the implementation of a compressed workweek scheme. Considering that the MOA clearly
states that the employee waives the payment of overtime pay in exchange of a five-day workweek, there is
no room for interpretation and its terms should be implemented as they are written.
NOTES:
Memorandum of Agreement (May 20, 1996)

● regular working hours: 8:00 a.m. to 6:12 p.m., from Monday to Friday
● no overtime pay for work rendered during those hours as employees waive the right to claim it as per the
MOA.
● should the employee be permitted or required to work beyond 6:12 p.m, such will be entitled to overtime
pay.
6. Dasco vs. Philtranco, G.R. No. 211141. June 29, 2016 (Odchigue)
PETITIONER: HILARIO DASCO, REYMIR PARAFINA, RESPONDENT: PHILTRANCO SERVICE

RICHARD PARAFINA, EDILBERTO ANIA, MICHAEL ENTERPRISES, INC./CENTURION SOLANO (LOST)
ADANO, JAIME BOLO, RUBEN E. GULA, ANTONIO
CUADERNO and JOVITO CATANGUI (WON)
● Filed a complaint for regularization,

underpayment of wages, non-payment of
service incentive leave (SIL) pay, and attorney's
fees
LAW & PRINCIPLES:
FACTS:
● Philtranco Service Enterprises, Inc., (PSEI), a domestic corporation engaged in providing public utility
transportation.
● From 2006 to 2010 - the petitioners were employed by the respondents as bus drivers and/or conductors
with travel routes of Manila (Pasay) to Bicol, Visayas and Mindanao, and vice versa.
Page 14 of 52
● Petitioners filed a case against the respondents alleging that: they were already qualified for regular
employment status; were not paid overtime and paid below the minimum wage rate; cannot be considered
a field person and had not been given five-day SIL.
● Respondents alleged that: petitioners were paid on a fixed salary or minimum wage, whichever is higher;
they are seasonal employees and not entitled to five-day SIL.
LA RULING: (October 17, 2011) – in favor of respondents
● respondents were able to prove that the petitioners were paid on a fixed salary of P0.49 per kilometer run,
or minimum wage, whichever is higher.
● that the petitioners are not entitled to holiday pay and SIL pay because they are considered as field
personnel.
● but declared the petitioners as regular employees of the respondents
NLRC RULING: (February 22, 2012)
● petitioners are entitled to minimum wage, SIL pay, and overtime benefits because they are not field
personnel considering that they ply specific routes with fixed time schedules determined by the
respondents.
● NLRC concurred with the findings of the LA that the respondents failed to show any document, such as
employment contracts and employment records, that would show the dates of hiring as well as the fixed
period agreed upon.
CA RULING: (August 30, 2013) – reversed NLRC ruling, reinstated LA ruling
● denied petitioner’s claim for benefits, such as overtime pay and SIL pay since they are field personnel
● there was no way for the respondents to supervise the petitioners on their job – petitioners can deviate from
the fixed routes, take short cuts, make detours, and take breaks, among others
(1) they were already qualified for regular employment (1) the petitioners were paid on a fixed salary rate of
status since they have been working with the respondents P0.49 centavos per kilometer run, or minimum wage,
for several years; whichever is higher;
(2) they were paid only P404.00 per round trip, which lasts
from two to five days, without overtime pay and below (2) the petitioners are seasonal employees since
the minimum wage rate; (3) they cannot be considered their contracts are for a fixed period and their
as field personnel because their working hours are employment was dependent on the exigency of the
controlled by the respondents from dispatching to end extraordinary public demand for more buses during
point and their travel time is monitored and measured by peak months of the year; and
the distance because they are in the business of servicing (3) the petitioners are not entitled to overtime pay and
passengers where time is of the essence; and SIL pay because they are field personnel whose time
(4) they had not been given their yearly five-day SIL outside the company premises cannot be determined
since the time they were hired by the respondents. with reasonable certainty since they ply provincial
routes and are left alone in the field unsupervised.
ISSUES:
W/N petitioners as bus drivers and/or conductors are field personnel, and thus entitled to overtime pay and SIL pay.
RULING:
The determination of whether bus drivers and/or conductors are considered as field personnel was already threshed
out in the case of Auto Bus Transport Systems, Inc. v. Bautista.
NLRC properly concluded that the petitioners are not field personnel but regular employees who perform tasks
usually necessary and desirable to the respondents' business. Evidently, the petitioners are not field personnel as
defined above and the NLRC's finding in this regard is supported by the established facts of this case:
(1) the petitioners, as bus drivers and/or conductors, are directed to transport their passengers at a specified
time and place;
(2) they are not given the discretion to select and contract with prospective passengers;
Page 15 of 52
(3) their actual work hours could be determined with reasonable certainty, as well as their average trips per
month; and
(4) the respondents supervised their time and performance of duties.
In order to monitor their drivers and/or conductors, bus companies put checkers, who are assigned at tactical places
along the travel routes that are plied by their buses. Also, dispatchers supervise and ensure prompt departure at
specified times and arrival at the estimated proper time. Obviously, these drivers and/or conductors cannot be
considered as field personnel because they are under the control and constant supervision of the bus
companies while in the performance of their work.
Clearly, the petitioners, as bus drivers and/or conductors, are left alone in the field with the duty to comply with the
conditions of the respondents' franchise, as well as to take proper care and custody of the bus they are using. Since
the respondents are engaged in the public utility business, the petitioners, as bus drivers and/or conductors, should
be considered as regular employees of the respondents because they perform tasks which are directly and
necessarily connected with the respondents' business. Thus, they are consequently entitled to the benefits
accorded to regular employees of the respondents, including overtime pay and SIL pay.
NOTES:
Auto Bus Transport Systems, Inc. v. Bautista, where the Court explained that:
As a general rule, [field personnel] are those whose performance of their job/service is not supervised by
the employer or his representative, the workplace being away from the principal office and whose
hours and days of work cannot be determined with reasonable certainty; hence, they are paid specific
amount for rendering specific service or performing specific work. If required to be at specific places at
specific times, employees including drivers cannot be said to be field personnel despite the fact that they
are performing work away from the principal office of the employee. . . .
xxx xxx xxx

. . . At this point, it is necessary to stress … the fact that the employee's performance is unsupervised by
the employer…Thus, in order to conclude whether an employee is a field employee, it is also necessary to
ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer.
In so doing, an inquiry must be made as to whether or not the employee's time and performance are
constantly supervised by the employer
7. HSY Marketing Ltd. v Villastique, G.R. No. 219569, Aug. 17, 2016
PETITIONER: HSY Marketing Ltd. RESPONDENT: Virgilio Villastique

Hired Villastique as its field driver to deliver ready-to- Field driver for Fabulous Jeans & Shirt & General
wear items and/or general merchandise for a daily Merchandise
compensation of Php 370.00
LAW & PRINCIPLES:

● Employer-employee relationship exists even in cases where the companies set up "distributors" or "dealers"
which are, in reality, dummy companies that allow the mother company to avoid employer-employee
relations and, consequently, shield the latter from liability from employee claims in case of illegal dismissal,
closure, unfair labor practices, and the like.
● Case law instructs that the issue of whether or not an employer-employee relationship exists in a given
case is essentially a question of fact.
FACTS:
● Virgilio Villastique, field driver for Fabulous Jeans & Shirt & General Merchandise, figured in an accident
when the service vehicle (a 2010- model Mitsubishi Strada pick up) he was driving in Iligan City bumped a
pedestrian, Ryan Dorataryo.
● Fabulous Jeans shouldered the hospitalization and medical expenses of Dorataryo (Php 64,157.15), which
Villastique was asked to reimburse, but to no avail.
Page 16 of 52
● Villastique was allegedly required to sign a resignation letter On February 24, 2011, which he refused to
do.
● Villastique decided to file a complaint for illegal dismissal against Fabulous Jeans, and its owner, Alexander
G. Arqueza
● Labor Arbiter dismissed the charge of illegal dismissal. La noted that there was neither a notice of
termination issued to him, nor was he prevented from showing up in petitioner's place of business. There
was likewise no evidence submitted by petitioner that respondent had indeed voluntarily resigned. LA
awarded Villastique to be given Php 16,418.75 as service incentive leave pay.
● NLRC affirmed LA’s findings that there was no illegal dismissal to speak of, stressing the failure of
respondent to discharge the burden of proof, which shifted to him when his employer denied having
dismissed him. Petition for reconsideration was subsequently denied.
● CA affirmed NLRC’s decision.
● Case is elevated to the SC.
PETITIONER: HSY Marketing Ltd. RESPONDENT: Virgilio Villastique

Fabulous Jeans, Arqueza, et.al. ● There was illegal dismissal against Villastique.
● Contended that Villastique had committed
several violations in the course of his
employment, and had been found by his superior
and fellow employees to be a negligent and
reckless driver, which resulted in the vehicular
mishap involving Dorataryo.
● After they paid for Dorataryo's hospitalization
and medical expenses, Villastique went on
absence without leave, presumably to evade
liability for his recklessness.
● Since Villastique was the one who refused to
report for work, he should be considered as
having voluntarily severed his own employment.
HSY Marketing Ltd.

● LA should have dismissed the charges against
petitioner instead, considering that respondent
was employed as a field driver for Fabulous
Jeans, and that there was no employer-
employee
● relationship between him and petitioner.
ISSUES: Whether or not employment relationship existed between HSY and Villastique
RULING:
SC partially granted the petition affirming the lower court’s decision but deleted the award of
separation pay (P86,580.00). Instead, HSY Marketing Ltd., Co. was ordered to reinstate respondent Virgilio
O. Villastique to his former position without payment of backwages but entitled to a payment in unpaid
service incentive leave pay (Php 16,418.75).
On the existence of employer-employee relationship:

● Case law instructs that the issue of whether or not an employer-employee relationship exists in a
given case is essentially a question of fact.
● Considering that the LA, the NLRC, and the CA consistently found HSY liable as the employer of
respondent, the Court sees no compelling reason to depart from their judgment on this score.
● The SC noted that Villastique claimed in his Position Paper before the LA that he was hired by petitioner
and was required to report for work at its store in Cagayan de Oro City and this was corroborated by HSY
in its own Position Paper, declaring Villastique to be "a field driver for the Cagayan de Oro Branch of HSY
MARKETING LTD., CO., (NOVO JEANS & SHIRT)." Clearly, petitioner should be bound by such admission
and must not be allowed to continue to deny any employer-employee relationship with respondent
Page 17 of 52
Existence of employer-employee relationship in company Practice of setting up distributors or dealers:

● The Court also noted that it had already exposed the practice of setting up "distributors" or "dealers"
which are, in reality, dummy companies that allow the mother company to avoid employer-employee
relations and, consequently, shield the latter from liability from employee claims in case of illegal
dismissal, closure, unfair labor practices, and the like.
Affirmation of lower tribunals conclusion that there was no dismissal or abandonment of Villastique:
● The Court ruled that there was no substantial evidence presented to show that he was indeed dismissed
or was prevented from returning to his work.
● In the absence of any showing of an overt or positive act proving the dismissal of Villastique by HSY,
the latter's claim of illegal dismissal cannot be sustained, as such supposition would be self-serving,
conjectural, and of no probative value.
● The Court dismissed HSY claims of Villastique's voluntary resignation and/or abandonment and that
it deserved scant consideration, considering HSY's failure to discharge the burden of proving the
deliberate and unjustified refusal of respondent to resume his employment without any intention of
returning.
NOTES:
On the award of service leave pay:
● The reiterated its previous ruling that company drivers who are under the control and supervision of
management officers— like respondent herein— are regular employees entitled to benefits including
service incentive leave pay.
● "Service incentive leave is a right which accrues to every employee who has served 'within 12 months,
whether continuous or broken reckoned from the date the employee started working, including authorized
absences and paid regular holidays unless the working days in the establishment as a matter of practice
or policy, or that provided in the employment contracts, is less than 12 months, in which case said period
shall be considered as one [(1)] year.'
● It is also commutable to its money equivalent if not used or exhausted at the end of the year. In other words,
an employee who has served for one (1) year is entitled to it. He may use it as leave days or he may collect
its monetary value."
8. A. Nate Casket Maker v Arango, G.R. No. 192282, Oct. 5, 2016
PETITIONER: A. Nate Casket Maker; RESPONDENT: Elias Arango, Edwin Mapusao, Jorge Carino,
Armando and Anely Nate Jermie Mapusao, Wilson Nate, Edgar Nate, Michael Montales,
Armando and Anely Nate are the Celso Nate, Benies Llona, Allan Montales
owners/proprietors of A. Nate Casket Maker Workers that A. Nate Casket Maker hired in various dates as
who hired Arango et.al. carpenters, mascilladors and painters in their casket-making
business from 1998 until their alleged termination in March 2007.
LAW & PRINCIPLES:

● No employee shall be dismissed, unless there are just or authorized causes and only after compliance with
procedural and substantive due process.
● As regular employees, respondents were entitled to security of tenure and could be dismissed only for just
or authorized causes and after the observance of due process.
● The right to security of tenure is guaranteed under Article XIII, Section 3 of the 1987 Constitution, Article
279 of the Labor Code; and Section 2, Rule XIV, Book V of the Omnibus Rules Implementing the Labor
Code.
FACTS:
● Armando and Anely Nate hired Elias Arango, Edwin Mapusao, Jorge Carino, Jermie Mapusao, Wilson
Nate, Edgar Nate, Michael Montales, Celso Nate, Benies Llona, Allan Montales to work as carpenters,
mascilladors and painters in their casket-making business, A. Nate Casket Maker, in various dates from
1998 until their alleged termination in March 2007.
● According to A. Nate Casket Making, Arango et.al. are pakyaw and "stay-in" workers who would "always"
drink, quarrel with each other on petty things such that they could not accomplish the job orders on time.
Page 18 of 52
● Hence, A. Nate Casket Making would then be compelled to "contract out" to other workers for the
● job to be finished.
● Armando and Anely Nate proposed a new employment agreement which would change the existing pakyaw
system to "contractual basis" and would provide for vacation leave and sick leave pay and other benefits
given to regular employees.
● Arango et.al. were adamant and eventually refused to sign the contract,
● A. Nate Casket Making terminated the employment of Arango et.al.
● Arango et.al. filed a complaint for dismissal and nonpayment of separation pay against A. Nate Casket
Making.
● Labor Arbiter dismissed the petition. LA held that respondents were earning more than the minimum wage
per day; and as pakyaw workers, though they are deemed regular workers, they are not entitled to overtime
pay, holiday pay, service incentive leave pay and 13th month pay citing the case of field personnel and
those paid on purely commission basis.
● NLRC affirmed LA’s decision.
● CA reversed NLRC’s decision and subsequently denied A. Nate Casket Making motion for reconsideration.
PETITIONER: A. Nate Casket Maker; RESPONDENT: Elias Arango, Edwin Mapusao, Jorge Carino,
Armando and Anely Nate (Generally Lost but Jermie Mapusao, Wilson Nate, Edgar Nate, Michael Montales,
partially won as payment for 13th month pay Celso Nate, Benies Llona, Allan Montales (Won-Generally but
to Arango et.al. is concerned) Partially lost as payment for 13th month is concerned)
Based on their position paper: Based on their position paper:
● Arango et.al. are pakyaw workers who ● They worked from Monday to Saturday, from 7:00 a.m.
are paid per job order. to 10:00 p.m., with no overtime pay and any monetary
● Arango et.al. are also "stay-in" workers benefits despite having claimed for such.
with free board and lodging, but they ● They were made to sign a Contract of Employment with
would "always" drink, quarrel with each the following terms and conditions:
other on petty things such that they (1)they shall be working on contractual basis for a period
could not accomplish the job orders on of five months;
time. (2)renewal of employment contract after such period
● Hence, petitioners would then be shall be on a case-to-case basis or subject to
compelled to "contract out" to other respondents' efficiency and performance;
workers for the (3)petitioners shall reserve the right to terminate their
● job to be finished. employment should their performance fall below
● The proposed employment agreement expectations or if the conditions under which they were
which would change the existing employed no longer exist;
pakyaw system to "contractual basis" (4)their wages shall be on a piece-rate basis; (5)in the
and would provide for vacation leave performance of their tasks, they shall be obliged to
and sick leave pay and other benefits strictly follow their work schedules;
given to regular employees (6)they shall not be eligible to avail of sick leave or
vacation leave, nor receive 13th month pay and/or
Arguments before the SC: bonuses, or any other benefits given to a regular
● While they had always agreed and employee.
admitted from the beginning of the Claimed that they were underpaid, and that there was
case the regular employment status of non-payment of overtime pay, holiday pay, 5-day service
respondents, they contended the incentive leave pay and 13th month pay.
alleged fact that they never dismissed
the respondents from their Arguments before the SC:
employment. ● Only questions of law may be raised in a petition for
● Argued that since petitioners' business review on certiorari and that the errors being raised by
depended on the availability of job petitioners are questions of fact.
orders, necessarily the duration of ● A petition for review on certiorari under Rule 45 is a
respondents' employment is not mode of appeal where the issue is limited to questions
permanent but coterminous with the of law. In labor cases, a Rule 45 petition is limited to
completion of such job orders. reviewing whether the Court of Appeals correctly
● Since respondents are "pakyaw" determined the presence or absence of grave abuse of
workers or "paid by result," they are not discretion and deciding other jurisdictional errors of the
entitled to their National Labor Relations Commission.
Page 19 of 52
● money claims.
ISSUES: Whether or not A. Nate Casket Maker is guilty of illegal dismissal
RULING:
The SC partially granted the petition insofar as payment for 13th month pay to Arango et.al. is concerned.
SC, however, affirmed most of the CA’s decision.
On being entitled to security of tenure:

● No employee shall be dismissed, unless there are just or authorized causes and only after
compliance with procedural and substantive due process.
●
● As regular employees, respondents were entitled to security of tenure and could be dismissed only
for just or authorized causes and after the observance of due process.
●
● The right to security of tenure is guaranteed under Article XIII, Section 3 of the 1987 Constitution:
Article XIII. Social Justice and Human Rights Labor
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to
security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and
decision-making processes affecting their rights and benefits as may be provided by law.
● Likewise, Article 279 of the Labor Code also provides for the right to security of tenure, thus:
Art. 279. Security of tenure— In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his actual
reinstatement.
● Section 2, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code provides:
Sec. 2. Notice of Dismissal— Any employer who seeks to dismiss a worker shall furnish him a written
notice stating the particular acts or omission constituting the grounds for his dismissal. In cases of
abandonment of work, the notice shall be served at the workers' last known address.
● A. Nate Casket Maker violated respondents' rights to security of tenure and constitutional right to
due process in not even serving them with a written notice of termination which would recite any
valid or just cause for their dismissal. Respondents were merely told that their services are terminated.
On reinstatement and the grant of backwages:

● An employee unjustly dismissed from work is entitled to reinstatement and backwages, among
others.
● Reinstatement restores the employee who was unjustly dismissed to the position from which he was
removed, that is, to his status quo ante dismissal, while the grant of backwages allows the same employee
to recover from the employer that which he had lost by way of wages as a result of his dismissal.
● These twin remedies— reinstatement and payment of backwages— make the dismissed employee
whole who can then look forward to continued employment.
● The SC agreed with the CA that in the case, separation pay in lieu of reinstatement is warranted in lieu of
the fact that respondents filed their complaint in 2007, and that nine (9) years has already passed which is
a substantial period to bar reinstatement.
● However the amount of backwages to which each respondent is entitled was left to the NLRC’s
determination, since Arango et.al. are piece-rate workers being paid by the piece, there is need to
determine the varying degrees of production and days worked by each worker.
● Court cited its previous ruling in David v. Macasio, where it held that workers engaged on pakyaw or
● "task basis" are entitled to holiday and service incentive leave pay (SIL) provided they are not field
personnel.
On termination:
Page 20 of 52
● The burden of proving just and valid cause for dismissing an employee from his employment rests
upon the employer, and the latter's failure to do so would result in a finding that the dismissal is
unjustified. failed to discharge this burden.
● SC noted that the position paper of petitioners is contrary to the terms and conditions stated in the
employment contract. It is specifically stated in the employment agreement that during the period of
employment, respondents would not be eligible to earn or receive any sick leave pay, vacation leave pay,
or any other benefits given to regular employees such as 13th month pay and bonuses. The key to
understanding petitioners' motive in severing respondents' employment lies in the tenor of the contract itself
which is the opposite to what is alleged by petitioners in their position paper. As correctly observed by the
CA, there was the absence of proof to show that petitioners conducted an investigation on the alleged
drinking and petty quarrelling of respondents nor did the petitioners provide respondents with an opportunity
to explain their side with respect to charges against them.
● The validity of the charge must be established in a manner consistent with due process.
● A stipulation in an agreement can be ignored as and when it is utilized to deprive the employee of his
security of tenure. The sheer inequality that characterizes employer-employee relations, where the scales
generally tip against the employee, often scarcely provides him real.
● Employers cannot seek refuge under whatever terms of the agreement they had entered into with their
employees. The law, in defining their contractual relationship, does so, not necessarily or exclusively upon
the terms of their written or oral contract, but also on the basis of the nature of the work of employees who
had been called upon to perform.
NOTES:
On the concept of regular employees:
● Art 280 of the Labor Code provides:
Art. 280. Regular and Casual Employment— The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed for
a specific project or undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or services to be performed is seasonal in nature and
the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph; Provided,
That, any employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed and his
employment shall continue while such activity exist.
● This provision classifies employees into regular, project, seasonal, and casual. It further classifies regular
employees into two kinds:
(1) those "engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer"; and
(2) casual employees who have "rendered at least one year of service, whether such service is continuous
or broken."
● A regular employment, whether it is one or not, is aptly gauged from the concurrence, or the non-
concurrence, of the following factors—
(a) the manner of selection and engagement of the putative employee;
(b) the mode of payment of wages;
(c) the presence or absence of the power of dismissal; and
(d) the presence or absence of the power to control the conduct of the putative employee or the power to
control the employee with respect to the means or methods by which his work is to be accomplished. The
"control test" assumes primacy in the overall consideration.
TOPIC 9: MINIMUM LABOR STANDARD BENEFITS
1. San Miguel Corp v CA, G.R. No. 146775, Jan. 30, 2002
Page 21 of 52
PETITIONER: San Miguel Corp. RESPONDENT: CA frmr. 13th division, Usec. Jose
San Miguel Corporation (SMC) found to be underpaying Espanol, Hon. Cresencio Trajano, Reg. Dir. Allan
its employee during the regular Muslim holiday. Macaraya
Ordered SMC to pay both its Muslim and non-Muslim
employees holiday pay within thirty (30) days from
receipt of the order. SMC appealed to the DOLE main
office in Manila.
LAW & PRINCIPLES:

● Wages and other emoluments granted by law to the working man are determined on the basis of the criteria
laid down by laws and certainly not on the basis of the worker's faith or religion.
● Muslim holidays are provided under Articles 169 and 170, Title I, Book V, of PD No. 1083, otherwise known
as the Code of Muslim Personal Laws, and should be read in conjunction with Art. 94 of the Labor Code.
FACTS:
● Department of Labor and Employment (DOLE), Iligan District Office, conducted a routine inspection in the
premises of San Miguel Corporation (SMC) in Sta. Filomena, Iligan City.
● DOLE discovered in the inspection that there was underpayment by SMC of regular Muslim holiday pay to
its employees.
● DOLE sent a copy of the inspection result to SMC.
● SMC contested the findings and DOLE conducted summary hearings on 19 November 1992, 28 May 1993
and 4 and 5 October 1993.
● SMC failed to submit proof that it was paying regular Muslim holiday pay to its employees.
● Hence, Alan M. Macaraya, Director IV of DOLE Iligan District Office issued a compliance order, dated 17
December 1993, directing SMC to consider Muslim holidays as regular holidays and to pay both its Muslim
and non-Muslim employees holiday pay within thirty (30) days from the receipt of the order.
● SMC appealed to DOLE main office but its appeal was initially dismissed for having been filed late but was
later on reconsidered (since appeal was found to be within the reglementary period).
● DOLE finally dismissed the SMC’s appeal.
● SMC went to the SC for relief via a petition for certiorari
● SC referred the case to CA.
● CA modified the Orders with regard to the payment of Muslim holiday pay from 200% to 150% of the
employee's basic salary and subsequently denied its motion for reconsideration.
PETITIONER: San Miguel Corp. RESPONDENT: CA frmr. 13th division, Usec. Jose
● DOLE order is contrary to the intent and purpose Espanol, Hon. Cresencio Trajano, Reg. Dir. Allan
of PD 1083 and the prevailing jurisprudence. Macaraya
● Art. 3(3) of Presidential Decree No. 1083 CA decision:
provides that "(t)he provisions of this Code shall ● Assuming arguendo that the respondent's
be applicable only to Muslims..." position is correct, then by the same token,
Muslims throughout the Philippines are also
not entitled to holiday pays on Christian
holidays declared by law as regular holidays.
Wages and other emoluments granted by law
to the working man are determined on the
basis of the criteria laid down by laws and
certainly not on the basis of the worker's faith
or religion.
OSG:
● SMC did not deny that it was not paying
Muslim holiday pay to its non-Muslim
employees, it’s merely contending that its non-
Muslim employees are not entitled to Muslim
holiday pay.
Page 22 of 52
ISSUES: Whether or not employees are entitled to regular religious-based holidays (i.e. Muslim holiday pay)
even if they are not of the same faith (non-Muslim).
RULING:
The SC dismissed the petition.
On Art. 169 and 170, Title I, Book V, of PD No. 1083 and Art. 94 of the Labor Code:
● Muslim holidays are provided under Articles 169 and 170, Title I, Book V, of PD No. 1083, otherwise
known as the Code of Muslim Personal Laws, and should be read in conjunction with Art. 94 of the
Labor Code.
Art. 169. Official Muslim holidays– The following are hereby recognized as legal Muslim holidays:
(a) 'Amun Jadîd (New Year), which falls on the first day of the first lunar month of Muharram;
(b) Maulid-un-Nabî (Birthday of the Prophet Muhammad), which falls on the twelfth day of the third lunar
month of Rabi-ul-Awwal;
(c) Lailatul Isrâ Wal Mi'râj (Nocturnal Journey and Ascension of the Prophet Muhammad), which falls on
the twenty-seventh day of the seventh lunar month of Rajab;
(d) 'Îd-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar month of Shawwal,
commemorating the end of the fasting season; and
(e) 'Îd-ûl-Adhâ (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month of Dhû'l-Hijja.
Art. 170. Provinces and cities where officially observed–

(1) Muslim holidays shall be officially observed in the Provinces of Basilan, Lanao del Norte, Lanao del Sur,
Maguindanao, North Cotabato, Iligan, Marawi, Pagadian, and Zamboanga and in such other Muslim
provinces and cities as may hereafter be created;
(2) Upon proclamation by the President of the Philippines, Muslim holidays may also be officially observed
in other provinces and cities.
● The foregoing provisions should be read in conjunction with Art. 94 of the Labor Code, which
provides:
Art. 94. Right to holiday pay—
(a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service
establishments regularly employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such employee shall be paid a
compensation equivalent to twice his regular rate;
No distinction between Muslims and non-Muslims as regards payment of benefits for Muslim holidays:
● There should be no distinction between Muslims and non-Muslims as regards payment of benefits
for Muslim holidays since Article 3(3) of Presidential Decree No. 1083 also declares that "...nothing
herein shall be construed to operate to the prejudice of a non-Muslim."
● SC affirmed CA’s argument that wages and other emoluments granted by law to the working man are
determined on the basis of the criteria laid down by laws and certainly not on the basis of the
worker's faith or religion.
NOTES:
On DOLE Regional Director’s jurisdiction:
● Regional Director Macaraya acted as the duly authorized representative of the Secretary of Labor and
Employment and it was within his power to issue the compliance order to SMC.
● Article 128, Section B of the Labor Code, as amended by Republic Act No. 7730, provides:
Article 128. Visitorial and enforcement power— xxx xxx xxx
(b) Notwithstanding the provisions of Article 129 and 217 of this Code to the contrary, and in cases where
the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue compliance orders to give effect to the labor
standards provisions of this Code and other labor legislation based on the findings of labor employment
and enforcement officers or industrial safety engineers made in the course of the inspection. The Secretary
or his duly authorized representative shall issue writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the employer contests the findings of the labor
employment and enforcement officer and raises issues supported by documentary proofs which were not
considered in the course of inspection.
Page 23 of 52
2. Tan vs. Lagrama
PETITIONER: Rolando Y. Tan RESPONDENT: Leovigildo Lagrama

President of Supreme Theater Corp & General Painter, making ad billboards, and murals for the
Manager of Crown Empire Theaters in Butuan City motion pictures of Empress, Supreme, and Crown
Theaters
LAW & PRINCIPLES:

In determining whether there is an employer-employee relationship, we have applied a "four-fold test," to wit: (1)
whether the alleged employer has the power of selection and engagement of employees; (2) whether he has
control of the employee with respect to the means and... methods by which work is to be accomplished; (3)
whether he has the power to dismiss; and (4) whether the employee was paid wages.
FACTS:
· Lagrama works for Tan as painter of billboards and murals for the motion pictures shown at the theaters
managed by Tan for more than 10years
· Lagrama was dismissed for having urinated in his working area
· Lagrama filed a complaint for illegal dismissal and non payment of benefits
· Tan asserted that Lagrama was an independent contractor as he was paid in piece-work basis
PETITIONER: Tan RESPONDENT: Lagrama

Lagrama was an independent contractor who did his He alleged that he had been illegally dismissed and
work according to his methods, while he (petitioner) was sought reinvestigation and payment of 13th month
only interested in the result thereof. pay, service incentive leave pay,... salary differential,
and damages.
ISSUES: W/N Lagrama is an independent contractor or an employee of Tan?
RULING:
Lagrama is an employee not an independent contractor
Applying Four Fold Test
A. Power of Control - Evidence shows that the Lagrama performed his work as painter and under the
supervision and control of Tan.
1. Lagrama worked in a designated work area inside the theater of Tan for the use of which petitioner
prescribed rules, which rules included the observance of cleanliness and hygiene and prohibition against
urinating in the work area and any other place other than rest rooms and
2. Tan's control over Lagrama's work extended not only the use of work area but also the result of
Lagrama;s work and the manner and means by which the work was to be accomplished
3. Lagrama is not an independent contractor because he did not enjoy independence and freedom from
the control and supervision of Tan and he was subjected to Tan's control over the means and methods by which
his work is to be performed and accomplished
B. Payment of Wages
1. Lagrama worked for Tan on a fixed piece work basis is of no moment. Payment by result is a method
of compensation and does not define the essence of the relation.
2. Tat Lagrama was not reported as an employee to the SSS is not conclusive, on the question whether
he was an employee, otherwise Tan would be rewarded for his failure or even neglect to perform his obligation.
C. Power of Dismissal – by Tan stating that he had the right to fire Lagrama, Tan in effect acknowledged
Lagrama to be his employee
Page 24 of 52
D. Power of Selection and Engagement of Employees – Tan engaged the services of Lagrama without the
intervention of third party
NOTES:
3. Lambo vs NLRC
PETITIONER: Avelino Lambo and Vicente Belocura RESPONDENT: NLRC and J.C. Tailor Shop
LAW & PRINCIPLES:
There are two categories of employees paid by results: (1) those whose time and performance are supervised by
the employer. (Here, there is an element of control and supervision over the manner as to how the work is to be
performed. A piece-rate worker belongs to this category especially if he performs his work in the company premises.);
and (2) those whose time and performance are unsupervised. (Here, the employers control is over the result of the
work. Workers on pakyao and takay basis belong to this group.) Both classes of workers are paid per unit
accomplished. Piece-rate payment is generally practiced in garment factories where work is done in the company
premises, while payment on pakyao and takay basis is commonly observed in the agricultural industry, such as in
sugar plantations where the work is performed in bulk or in volumes difficult to quantify.
To justify a finding of abandonment of work, there must be proof of a deliberate and unjustified refusal on the part of
an employee to resume his employment. The burden of proof is on the employer to show an unequivocal intent on
the part of the employee to discontinue employment. Mere absence is not sufficient. It must be accompanied by
manifest acts unerringly pointing to the fact that the employee simply does not want to work anymore.
Not all quitclaims are per se invalid or against public policy. But those (1) where there is clear proof that the waiver
was wangled from an unsuspecting or gullible person or (2) where the terms of settlement are unconscionable on
their face are invalid.
FACTS:
● Petitioners were employed as tailors by respondent shop. They worked from 8am-7pm daily, including
Sundays and Holidays and were paid on a piece-work basis.
● When they were terminated, they filed a case for illegal dismissal, payment of overtime pay, holiday pay,
premium pay on holidays and rest days, service incentive pay, separation pay, 13th month pay, and att’s
fees.
● LA found respondents guilty. LA awarded backwages, overtime pay, holiday pay, 13 month pay, separation
pay & atty’s fees, corresponding to 10% of the total monetary awards in favor of petitioners.
● NLRC reversed the LA’s decision after finding petitioners had not been dismissed from employment but
merely threated with a closure of business if they insisted on their demand for a straight payment of their
minimum wage. NLRC held petitioners guilty of abandonment of work.
● Petitioners allege that they were dismissed by respondents as they were about to file a petition with DOLE
for payment of benefits. They denied that they abandoned their work.
Petitioners allege that they were dismissed by private respondents
as they were about to file a petition with the Department of Labor
and Employment (DOLE) for the payment of benefits such as Social
Security System (SSS) coverage, sick leave and vacation leave.
They deny that they abandoned their work
ISSUES: Whether the employees should receive the holiday pay they are asking for
Page 25 of 52
RULING:
● YES. As petitioners were illegally dismissed, they are entitled to reinstatement with backwages.
Considering that petitioners were dismissed from the service on January 17, 1989, the Labor Arbiter
correctly applied the rule in the Mercury Drug case, according to which the recovery of bakwages should
be limited to 3 years without qualifications or deductions. Any award in excess of 3 years is null and void
as to the excess/
● the Labor Arbiter correctly ordered private respondents to give separation pay. considerable time has
lapsed since petitioners’ dismissal, so that reinstatement would now be impractical and hardly in the best
interest of the parties. in lieu of reinstatement, separation pay should be awarded to petitioners at the rate
of 1 month salary for every year of service, with a fraction of at least 6 months of service being considered
as 1 year.
● the awards for overtime pay, holiday pay and 13th month pay are in accordance with our finding that
petitioners are regular employees, although paid on a piece-rate basis.
NOTES:
4. R&E Transport v. Latag, GR no. 155214, Feb. 13, 2004 (CUARTEROS)
PETITIONER: R & E TRANSPORT, INC., and RESPONDENT: AVELINA P. LATAG, representing her
HONORIO ENRIQUEZ (PARTIALLY GRANTED) deceased husband, PEDRO M. LATAG
LAW & PRINCIPLES:

● Retirement pay computation: at least one-half (1/2) month salary for every year of service, a fraction of at
least six (6) months being considered as one whole year
● One half-month salary shall mean: 15 days plus one-twelfth (1/12) of the 13th month pay and the cash
equivalent of not more than five (5) days of service incentive leave
● Same formula under the New Retirement Law
● If you are paid according to “BOUNDARY SYSTEM”, you are NOT ENTITLED to 13 th MP AND SERVICE
INCENTIVE PAY
FACTS:
Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. When La Mallorca ceased from
business operations, Latag transferred to [petitioner] R & E Transport, Inc. He was receiving an average daily salary
of five hundred pesos (P500.00) as a taxi driver.
Latag got sick in January 1995 and was forced to apply for partial disability with the SSS, which was granted. When
he recovered, he reported for work in September 1998 but was no longer allowed to continue working on account of
his old age.
Latag thus asked Felix Fabros, the administrative officer of petitioners, for his retirement pay pursuant to Republic
Act 7641 but he was ignored. Thus, on December 21, 1998, Latag filed a case for payment of his retirement pay
before the NLRC. Latag however died on April 30, 1999. Subsequently, his wife, Avelina Latag, substituted him.
LABOR ARBITER: rendered a decision on Jan. 10,

2000 in favor of respondent; that the 23 years of
employment of Pedro with La Mallorca Taxi must be
added to his 14 years with R & E Transport, Inc., for a total
of 37 years, hence, the sum of P277,500.00 by way of
retirement pay.; by May 23, 2000, LA ordered execution
of aforementioned decision.
PETITIONER:
Page 26 of 52
By Jan. 20, 2000, they invited respondent to their RESPONDENT:

counsel’s office and was offered the amount of
P38,500.00, which she accepted. Respondent was also She received the Jan. 10 order of LA only after she
asked to sign an already prepared quitclaim and release received the amount of 38.5K from the petitioner.
and a joint motion to dismiss the case.
Petitioner filed the quitclaim and motion to dismiss but the

LA already ordered to execute its Jan. 10 decision; hence,
they appealed to the NLRC
NLRC: in favor of petitioner although there was no

posting of cash bond; BUT Pedro must be credited only
with his service to R & E Transport, Inc., because the
evidence shows that the aforementioned companies are
two different entities; that means, for the purpose of
computing retirement pay, it should only for 14yrs. Appealed before CA contending that under Article 223
of the Labor Code and Section 3, Rule VI of the New
Rules of Procedure of the NLRC, an employer's appeal
of a decision involving monetary awards may be
perfected only upon the posting of an adequate cash or
surety bond.
CA: in favor of respondent; appeal of petitioner

before the NLRC was not perfected due to absence
of cash bond; thus, the LA’s Jan. 10 decisions had
already become final and executory .
ISSUES: (1) WN the SC should respect NLRC’s finding that repsondent’s number of creditable years of service for
retirement benefits is only 14 years as against those of the LA that is 37yrs.;
(2) WN the quitclaim and waiver was valid; and
(3) WN writ of execution order (May 23) involved a monetary award
RULING: 1. YES.
The labor arbiter's conclusion — that Mallorca Taxi and R & E Transport, Inc., are one and the same entity — is
negated by the documentary evidence presented by petitioners. Their evidence sufficiently shows the following facts:
1) R & E Transport, Inc., was established only in 1978; 2) Honorio Enriquez, its president, was not a stockholder of
La Mallorca Taxi; and 3) none of the stockholders of the latter company hold stocks in the former.
Furthermore, basic is the rule that the corporate veil may be pierced only if it becomes a shield for fraud, illegality or
inequity committed against a third person. Piercing the veil of corporate fiction may be allowed only if the following
elements concur: (1) control — not mere stock control, but complete domination — not only of finances, but of policy
and business practice in respect to the transaction attacked, must have been such that the corporate entity as to
this transaction had at the time no separate mind, will or existence of its own; (2) such control must have been used
by the defendant to commit a fraud or a wrong to perpetuate the violation of a statutory or other positive legal duty,
or a dishonest and an unjust act in contravention of plaintiff's legal right; and (3) the said control and breach of duty
must have proximately caused the injury or unjust loss complained of."
Respondent has not shown by competent evidence that one taxi company had stock control and complete
domination over the other or vice versa. In fact, no evidence was presented to show the alleged renaming of "La
Mallorca Taxi" to "R & E Transport, Inc." The seven-year gap between the time the former closed shop and the date
when the latter came into being also casts doubt on any alleged intention of petitioners to commit a wrong or to
violate a statutory duty. This lacuna in the evidence compels us to reverse the Decision of the CA affirming the labor
arbiter's finding of fact that the basis for computing Pedro's retirement pay should be 37 years, instead of only 14
years.
2. YES.
Page 27 of 52
As to the Quitclaim and Waiver signed by Respondent Avelina Latag, the appellate court committed no error when
it ruled that the document was invalid and could not bar her from demanding the bene􀀻ts legally due her husband.
This is not to say that all quitclaims are invalid per se. Courts, however, are wary of schemes that frustrate workers'
rights and benefits, and look with disfavor upon quitclaims and waivers that bargain these away.
Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article 287 of the
Labor Code, as amended by Republic Act No. 7641, which partly reads: “…may retire and shall be entitled to
retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six
(6) months being considered as one whole year… “Unless the parties provide for broader inclusions, the term one
half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent
of not more than five (5) days of service incentive leaves .”
The rules implementing the New Retirement Law similarly provide the abovementioned formula for computing the
one-half month salary. Since Pedro was paid according to the "boundary" system, he is not entitled to the 13th month
and the service incentive pay; hence, his retirement pay should be computed on the sole basis of his salary. It is
accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the "boundary" or fee
they pay to the owners or operators of their vehicles. Thus, the basis for computing their benefits should be the
average daily income. In this case, the CA found that Pedro was earning an average of five hundred pesos (P500)
per day. We thus compute his retirement pay as follows: P500 x 15 days x 14 years of service equals P105,000.
Compared with this amount, the P38,850 he received, which represented just over one third of what was legally due
him, was unconscionable.
3. YES.
Under Article 223 of the Labor Code, an appeal from the labor arbiter's decision, award or order must be made within
ten (10) calendar days from receipt of a copy thereof by the party intending to appeal it; and, if the judgment involves
a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond.
Such cash or bond must have been issued by a reputable bonding company duly accredited by the NLRC in the
amount equivalent to the monetary award stated in the judgment. Sections 1, 3 and 6 of Rule VI of the New Rules
of Procedure of the NLRC implement this Article.
Indeed, this Court has repeatedly ruled that the perfection of an appeal in the manner and within the period
prescribed by law is not only mandatory but jurisdictional, and the failure to perfect an appeal has the effect of
rendering the judgment final and executory. Nonetheless, procedural lapses may be disregarded because of
fundamental considerations of substantial justice; or because of the special circumstances of the case combined
with its legal merits or the amount and the issue involved.
The requirement to post a bond to perfect an appeal has also been relaxed in cases when the amount of the award
has not been included in the decision of the labor arbiter. Besides, substantial justice will be better served in the
present case by allowing petitioners' appeal to be threshed out on the merits, especially because of serious errors
in the factual conclusions of the labor arbiter as to the award of retirement benefits.
NOTES:
5. Asian Transmission v. CA, G.R. No. 144664. March 15, 2004 (Cuarteros)
PETITIONER: ASIAN TRANSMISSION RESPONDENT: The Hon. COURT OF APPEALS,

CORPORATION (DISMISSED) Thirteenth Division, HON. FROILAN M. BACUNGAN as
Voluntary Arbitrator, KISHIN A. LALWANI, Union, Union
representative to the Panel Arbitrators; BISIG NG ASIAN
TRANSMISSION LABOR UNION (BATLU); HON.
BIENVENIDO T. LAGUESMA in his capacity as
Secretary of Labor and Employment;and DIRECTOR
CHITA G. CILINDRO in her capacity as Director of
Bureau of Working Conditions
Page 28 of 52
LAW & PRINCIPLES:
● What is a Holiday Pay? It is a legislated benefit enacted as part of the Constitutional imperative that the
State shall afford protection to labor.
● Why does it exist? To serve its purpose of, not merely to prevent diminution of the monthly income of the
workers on account of work interruptions, but also to enable the worker to participate in the national
celebrations held during the days identified as with great historical and cultural significance. In other words,
although the worker is forced to take a rest, he earns what he should earn, that is, his holiday pay.
● What is the reason behind in declaring Independence Day (June 12), Araw ng Kagitingan (April 9), National
Heroes Day (last Sunday of August), Bonifacio Day (November 30) and Rizal Day (December 30) as
national holidays? To afford Filipinos with a recurring opportunity to commemorate the heroism of the
Filipino people, promote national identity, and deepen the spirit of patriotism.
● For Labor Day (May 1), what is the reason behind it? Traditionally reserved to celebrate the contributions
of the working class to the development of the nation.
● For religious holidays? To allow the worker to celebrate his faith with his family.
FACTS: DOLE Undersecretary Cresenciano B. Trajano, issued an Explanatory Bulletin that employees are entitled
to 200% of their basic wage on April 9, 1993, whether unworked, which, apart from being Good Friday and, therefore,
a legal holiday, is also Araw ng Kagitingan, which is also a legal holiday.
Despite the explanatory bulletin, petitioner opted to pay its daily paid employees only 100% of their basic pay on
April 9, 1998. Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested. In accordance with Step 6
of the grievance procedure of the CBA existing between petitioner and BATLU, the controversy was submitted for
voluntary arbitration.
The Office of the Voluntary Arbitrator rendered a decision directing petitioner to pay its covered employees "200%
and not just 100% of their regular daily wages for the unworked April 9, 1998 which covers two regular holidays,
namely, Araw ng Kagitingan and Maundy Thursday.
NOTE: Art. 94 (c) (Right to Holiday Pay), Labor Code: “(c) As used in this Article, "holiday" includes: New Year's
Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of July, the
thirtieth of November, the twenty-fifth and thirtieth of December and the day designated by law for holding a general
election” was amended by Executive Order No. 203 issued on June 30, 1987, such that the regular holidays are
now: 1. New Year's Day January 1; 2. Maundy Thursday Movable Date; 3. Good Friday Movable Date; 4. Araw ng
Kagitingan April 9 (Bataan and Corregidor Day); 5. Labor Day May 1; 6. Independence Day June 12; 7. National
Heroes Day Last Sunday of August; 8. Bonifacio Day November 30; 9. Christmas Day December 25; and 10. Rizal
Day December 30.
VOLUNTARY ARBITRATOR: in respondent’s favor; Article 94 of the Labor Code provides for holiday pay for
every regular holiday, the computation of which is determined by a legal formula which is not changed by the fact
that there are two holidays falling on one day, like on April 9, 1998 when it was Araw ng Kagitingan and at the same
time was Maundy Thursday; and that that the law, as amended, enumerates ten regular holidays for every year
should not be interpreted as authorizing a reduction to nine the number of paid regular holidays "just because April
9 (Araw ng Kagitingan) in certain years, like 1993 and 1998, is also Holy Friday or Maundy Thursday."
CA: in respondent’s favor; the CBA between petitioner and BATLU, the law governing the relations between them,
clearly recognizes their intent to consider Araw ng Kagitingan and Maundy Thursday, on whatever date they may
fall in any calendar year, as paid legal holidays during the effectivity of the CBA and that "[t]here is no condition,
qualification or exception for any variance from the clear intent that all holidays shall be compensated.” In the
absence of an explicit provision in law which provides for [a] reduction of holiday pay if two holidays happen to fall
on the same day, any doubt in the interpretation and implementation of the Labor Code provisions on holiday pay
must be resolved in favor of labor."
PETITIONER: (see issues, no other arguments) RESPONDENT: (confidently silent lol)
ISSUES: 1. WN the payment of holiday pay is mandatory; and

2. WN the DOLE bulletin, entitling daily-paid employees to be paid for two regular holidays which fall on the same
day, “overruled” Wellington v. Trajano ruling
Page 29 of 52
RULING: 1. YES.
Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State shall afford
protection to labor. Its purpose is not merely "to prevent diminution of the monthly income of the workers on account
of work interruptions. In other words, although the worker is forced to take a rest, he earns what he should earn, that
is, his holiday pay." It is also intended to enable the worker to participate in the national celebrations held during the
days identified as with great historical and cultural significance.
Art. 94 of the Labor Code, as amended, affords a worker the enjoyment of ten paid regular holidays. The provision
is mandatory, regardless of whether an employee is paid on a monthly or daily basis. Unlike a bonus, which is a
management prerogative, holiday pay is a statutory benefit demandable under the law.
Since a worker is entitled to the enjoyment of ten paid regular holidays, the fact that two holidays fall on the same
date should not operate to reduce to nine the ten holiday pay benefits a worker is entitled to receive.
When the language of the law is clear and unequivocal, the law must be taken to mean exactly what it says. In the
case at bar, there is nothing in the law which provides or indicates that the entitlement to ten days of holiday pay
shall be reduced to nine when two holidays fall on the same day.
2. NO.
In Wellington, the issue was whether monthly-paid employees are entitled to an additional day's pay if a holiday falls
on a Sunday. This Court, in answering the issue in the negative, observed that in fixing the monthly salary of its
employees, Wellington took into account "every working day of the year including the holidays specified by law and
excluding only Sunday." In the instant case, the issue is whether daily-paid employees are entitled to be paid for two
regular holidays which fall on the same day.
In any event, Art. 4 of the Labor Code provides that all doubts in the implementation and interpretation of its
provisions, including its implementing rules and regulations, shall be resolved in favor of labor. For the working man's
welfare should be the primordial and paramount consideration.
Moreover, Sec. 11, Rule IV, Book III of the Omnibus Rules to Implement the Labor Code provides that "Nothing in
the law or the rules shall justify an employer in withdrawing or reducing any benefits, supplements or payments for
unworked regular holidays as provided in existing individual or collective agreement or employer practice or policy."
From the pertinent provisions of the CBA entered into by the parties, petitioner had obligated itself to pay for the
legal holidays as required by law.
NOTES: In the 1997-1998 CBA, ART. XIV enumerated the PAID LEGAL HOLIDAYS to be paid by the company:
1. New Year's Day (January 1st); 2. Holy Thursday (moveable); 3. Good Friday (moveable); Araw ng Kagitingan
(April 9th); 5. Labor Day (May 1st); 6. Independence Day (June 12th); 7. Bonifacio Day [November 30]; 8. Christmas
Day (December 25th); 9. Rizal Day (December 30th); 10. General Election designated by law, if declared public non-
working holiday; and 11. National Heroes Day (Last Sunday of August. Only an employee who works on the day
immediately preceding or after a regular holiday shall be entitled to the holiday pay. A paid legal holiday occurring
during the scheduled vacation leave will result in holiday payment in addition to normal vacation pay but will not
entitle the employee to another vacation leave. Under similar circumstances, the COMPANY will give a day's wage
for November 1st and December 31st whenever declared a holiday. When required to work on said days, the
employee will be paid according to Art. VI, Sec. 3B hereof
6. AUTO BUS TRANSPORT SYSTEMS, INC. vs. ANTONIO BAUTISTA
LAW & PRINCIPLES:

Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE: (a) Every employee who has rendered at least one year of
service shall be entitled to a yearly service incentive leave of five days with pay.
Page 30 of 52
Book III, Rule V: SERVICE INCENTIVE LEAVE

SECTION 1. Coverage. This rule shall apply to all employees except:
(d) Field personnel and other employees whose performance is unsupervised by the employer including those who
are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for
performing work irrespective of the time consumed in the performance thereof.
FACTS:
● Since 24 May 1995, respondent Antonio Bautista has been employed by petitioner Auto Bus Transport
Systems, Inc. (Autobus). Respondent was paid on commission basis, seven percent (7%) of the total gross
income per travel, on a twice a month basis.
● On 03 January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the
bus he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly
stopped at a sharp curve without giving any warning. Respondent averred that the accident happened
because he was compelled by the management to go back to Roxas, Isabela, although he had not slept
for almost twenty four (24) hours, as he had just arrived in Manila from Roxas, Isabela.
● Respondent further alleged that he was not allowed to work until he fully paid the amount of P75,551.50,
representing thirty percent (30%) of the cost of repair of the damaged buses and that despite respondent's
pleas for reconsideration, the same was ignored by management. After a month, management sent him a
letter of termination.
● Petitioner, on the other hand, maintained that respondent's employment was replete with offenses involving
reckless imprudence, gross negligence, and dishonesty. To support its claim, petitioner presented copies
of letters, memos, irregularity reports, and warrants of arrest pertaining to several incidents wherein
respondent was involved.
● Later on, respondent instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of 13th
month pay and service incentive leave pay against Autobus.
● Labor Arbiter Monroe Tabingan dismissed Bautista’s petition but ruled that Bautista is entitled to P78,
1117.87 for his 13th month pay and P13, 788.05 for his unpaid service incentive leave pay.
● The case was appealed before the National Labor Relations Commission which modified the LA’s ruling by
deleting the award for 13th Month pay.
● On appeal, Court of Appeals affirmed the NLRC’s decision.
ISSUES:
1. Whether or not respondent is entitled to service incentive leave;
2. Whether or not the three (3)-year prescriptive period provided under Article 291 of the Labor Code, as amended,
is applicable to respondent's claim of service incentive leave pay.
RULING:
1. Yes.
According to the Implementing Rules(visit law/principles; up), Service Incentive Leave shall not apply to employees
classified as "field personnel." The phrase "other employees whose performance is unsupervised by the employer"
must not be understood as a separate classification of employees to which service incentive leave shall not be
granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor
Code as those "whose actual hours of work in the field cannot be determined with reasonable certainty.”
According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural employees who regularly
perform their duties away from the principal place of business or branch office of the employer and whose actual
hours of work in the field cannot be determined with reasonable certainty.
The definition of “field personnel" is not merely concerned with the location where the employee regularly performs
his duties but also with the fact that the employee's performance is unsupervised by the employer.
In order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of
work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made
as to whether or not the employee's time and performance are constantly supervised by the employer.
Page 31 of 52
Therefore, as correctly concluded by the appellate court respondent is not a field personnel but a regular employee
who performs tasks usually necessary and desirable to the usual trade of petitioner's business.
Accordingly, respondent is entitled to the grant of service incentive leave.
1. Yes.
Article 291 of the Labor Code states that all money claims arising from employer-employee relationship shall be
filed within three (3) years from the time the cause of action accrued; otherwise, they shall be forever barred.
It is essential at this point, however, to recognize that the service incentive leave is a curious animal in relation to
other benefits granted by the law to every employee. In the case of service incentive leave, the employee may
choose to either use his leave credits or commute it to its monetary equivalent if not exhausted at the end of the
year.
Furthermore, if the employee entitled to service incentive leave does not use or commute the same, he is entitled
upon his resignation or separation from work to the commutation of his accrued service incentive leave
Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can conclude
that the three (3)-year prescriptive period commences, not at the end of the year when the employee becomes
entitled to the commutation of his service incentive leave, but from the time when the employer refuses to pay its
monetary equivalent after demand of commutation or upon termination of the employee's services, as the case may
be.
In the case at bar, respondent had not made use of his service incentive leave nor demanded for its commutation
until his employment was terminated by petitioner. Neither did petitioner compensate his accumulated service
incentive leave pay at the time of his dismissal. It was only upon his filing of a complaint for illegal dismissal, one
month from the time of his dismissal, that respondent demanded from his former employer commutation of his
accumulated leave credits.
His cause of action to claim the payment of his accumulated service incentive leave thus accrued from the time when
his employer dismissed him and failed to pay his accumulated leave credits.
Since respondent had filed his money claim after only one month from the time of his dismissal, necessarily, his
money claim was filed within the prescriptive period provided for by Article 291 of the Labor Code.
NOTES:
7. SAN MIGUEL CORPORATION vs. CAROLINE C. DEL ROSARIO
LAW & PRINCIPLES:

Article 279 of the Labor Code, provides:
ARTICLE 279. Security of tenure. In cases of regular employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full back wages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.
(Emphasis, supplied)
FACTS:
Page 32 of 52
● Respondent was employed by petitioner as key account specialist. Petitioner informed respondent that her
probationary employment will be severed. At the close of the business hours of respondent was refused
entry to petitioner's premises.
● On June 24, 2002, respondent filed a complaint against petitioner for illegal dismissal and
underpayment/non-payment of monetary benefits.
● Respondent alleged that petitioner feigned an excess in manpower because after her dismissal, it hired
new recruits.
● On the other hand, petitioner claimed that respondent was a probationary employee whose services were
terminated as a result of the excess manpower that could no longer be accommodated by the company.
● Respondent was allegedly employed as a temporary reliever of Patrick Senen, an account specialist, who
met an accident.
● Anticipating an increase in sales volume, petitioner hired respondent as an account specialist on a
probationary status effective September 4, 2000 and was assigned at petitioner's Greater Manila Area-Key
Accounts Group (GMA-KAG) Beer Sales Group. However, petitioner's expected business growth did not
materialize, hence, it reorganized the GMA-KAG, and created the Centralized Key Accounts Group.
● This restructuring led to an initial excess of 49 regular employees, who were redeployed to other positions,
including the one occupied by respondent. Her employment was thus terminated effective March 12, 2001.
● On June 16, 2003, the Labor Arbiter rendered a decision declaring respondent a regular employee because
her employment exceeded six months and holding that she was illegally dismissed as there was no
authorized cause to terminate her employment.
● On appeal by petitioner to the NLRC, the latter modified the decision of the Labor Arbiter holding that
respondent is a regular employee whose termination from employment was valid but ineffectual for
petitioner's failure to comply with the 30-day notice to the employee and the Department of Labor and
Employment (DOLE)
ISSUES:
1. whether or not respondent is a regular employee of petitioner;
2. whether or not respondent was illegally dismissed;
3. if so, whether or not respondent is entitled to any monetary benefit.
RULING:
1. Yes.
In termination cases, like the present controversy, the burden of proving the
circumstances that would justify the employee's dismissal rests with the employer.
The best proof that petitioner should have presented to prove the probationary status of
respondent is her employment contract.
None, having been presented, the continuous employment of respondent as an account specialist for almost 11
months, from April 17, 2000 to March 12, 2001, means that she was a regular employee and not a temporary reliever
or a probationary employee.
The Payroll Authorities offered by petitioner showing that respondent was hired as a replacement, and later, as a
probationary employee do not constitute substantial evidence. As correctly found by the NLRC, none of these
documents bear the conformity of respondent, and are therefore, self-serving.
And while it is true that by way of exception, the period of probationary employment may exceed six months when
the parties so agree, such as when the same is established by company policy, or when it is required by the nature
of the work, none of these exceptional circumstance were proven in the present case. Hence, respondent whose
employment exceeded six months is undoubtedly a regular employee of petitioner.
Having ruled that respondent is a regular employee, her termination from employment must be for a just or authorized
because otherwise, her dismissal would be illegal.
Page 33 of 52
2. & 3. Article 279 of the Labor Code, provides:

ARTICLE 279. Security of tenure. In cases of regular employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full
back wages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual reinstatement. (Emphasis, supplied)
Considering that respondent was illegally dismissed, she is entitled not only to reinstatement but also to payment of
full back wages, computed from the time her compensation was actually withheld from her on March 13, 2001, up
to her actual reinstatement. As a regular employee of petitioner from the date of her employment on April 17, 2000,
she is likewise entitled to other benefits, i.e., service incentive leave pay and 13th month pay computed from such
date also up to her actual reinstatement.
Respondent is not, however, entitled to holiday pay because the records reveal that she is a monthly paid regular
employee. Under Section 2, Rule IV, Book III of the Omnibus Rules Implementing the Labor Code, employees who
are uniformly paid by the month, irrespective of the number of working days therein, shall be presumed to be paid
for all the days in the month whether worked or not. Hence, the Court of Appeals correctly deleted said award.
NOTES:
8. Penarada vs. Baganga Plywood Corp., G.R No. 159577
PETITIONER: CHARLITO PEÑARANDA RESPONDENT: BAGANGA PLYWOOD

CORPORATION and HUDSON CHUA
-
LAW & PRINCIPLES:Managerial employees and members of the managerial staff are exempted from the
provisions of the Labor Code on labor standards. Since petitioner belongs to this class of employees, he is
not entitled to overtime pay and premium pay for working on rest days.
FACTS:
Sometime in June 1999, Petitioner Charlito Peñaranda was hired as an employee of Baganga Plywood Corporation
(BPC) to take charge of the operations and maintenance of its steam plant boiler. 6 In May 2001, Peñaranda filed a
Complaint for illegal dismissal with money claims against BPC and its general manager, Hudson Chua, before the
NLRC.
After the parties failed to settle amicably, the labor arbiter directed the parties to file their position papers and submit
supporting documents. On their allegation, respondents claim that BPC was on temporary closure due to repair and
general maintenance and it applied for clearance with the Department of Labor and Employment, Regional Office
No. XI to shut down and to dismiss employees. And due to the insistence of herein complainant he was paid his
separation benefits. Consequently, when respondent [BPC] partially reopened in January 2001, [Peñaranda] failed
to reapply.
Hence, he was not terminated from employment much less illegally. He opted to severe employment when he
insisted payment of his separation benefits. Furthermore, being a managerial employee he is not entitled to overtime
pay and if ever he rendered services beyond the normal hours of work, [there] was no office order/or authorization
for him to do so. Finally, respondents allege that the claim for damages has no legal and factual basis and that the
instant complaint must necessarily fail for lack of merit.
The labor arbiter arbiter ruled that there was no illegal dismissal and that the petitioner's Complaint was premature
because he was still employed by BPC. The temporary closure of BPC's plant did not terminate his employment,
hence, he need not reapply when the plant reopened. The money claims for illegal dismissal was also weakened by
his quitclaim and admission during the clarificatory conference that he accepted separation benefits, sick and
vacation leave conversions and thirteenth month pay. Nevertheless, the labor arbiter found petitioner entitled to
overtime pay, premium pay for working on rest days, and attorney's fees in the total amount of P21,257.98.
Page 34 of 52
On the other hand, NLRC deleted the award of overtime pay and premium pay for working on rest days. According
to the Commission, the petitioner was not entitled to these awards because he was a managerial employee. The
case was elevated to the CA and the CA dismissed Penarada’s petition for certiorari.
Hence, this petition.
PETITIONER: alleges that he was employed by RESPONDENT: allege that complainant's

respondent [Banganga] on March 15, 1999 with a separation from service was done pursuant to Art.
monthly salary of P5,000.00 as Foreman/Boiler 283 of the Labor Code
Head/Shift Engineer until he was illegally terminated
on December 19, 2000. Further, [he] alleges that his
services [were] terminated without the benefit of due
process and valid grounds in accordance with law.
Furthermore, he was not paid his overtime pay,
premium pay for working during holidays/rest days,
night shift differentials and finally claimed for
payment of damages and attorney's fees having been
forced to litigate the present complaint.
ISSUES: 1. WON the CA committed grave abuse of discretion amounting to excess or lack of jurisdiction in
dismissing the case of the petitioner purely on technical grounds.
2. WON the NLRC erred in finding that the petitioner was a managerial employee.
RULING:
1. Yes, the CA committed grave abuse of discretion in dismissing the case of the petitioner for purely technical
grounds. The Petition filed with the CA shows a prima facie case. Petitioner attached his evidence to challenge the
finding that he was a managerial employee. IN his Motion for Reconsideration, petitioner also submitted the
pleadings before the labor arbiter in an attempt to comply with the CA rules. Evidently, the CA could have ruled on
the Petition on the basis of these attachments. Petitioner should be deemed in substantial compliance with the
procedural requirements. Under these extenuating circumstances, the Court does not hesitate to grant liberality in
favor of petitioner and to tackle his substantive arguments in the present case. Rules of procedure must be adopted
to help promote, not frustrate, substantial justice. The Court frowns upon the practice of dismissing cases purely on
procedural grounds. Considering that there was substantial compliance, a liberal interpretation of procedural rules
in this labor case is more in keeping with the constitutional mandate to secure social justice.
2. Yes, the NLRC erred in ruling that the petitioner is a managerial employee. The Court disagrees with the NLRC's
finding that petitioner was a managerial employee. However, petitioner was a member of the managerial staff, which
also takes him out of the coverage of labor standards. Like managerial employees, officers and member of the
managerial staff are not entitled to the provisions of law on labor standards. Petitioner supervised the engineering
section of the steam plant boiler. His work involved overseeing the operation of the machines and the performance
of the workers in the engineering section. This work necessarily required the use of discretion and
independent judgment to ensure the proper functioning of the steam plant boiler. As supervisor, petitioner is deemed
a member of the managerial staff. Noteworthy, even petitioner admitted that he was a supervisor. In his Position
Paper, he stated that he was the foreman responsible for the operation of the boiler. The term foreman implies that
Page 35 of 52
he was the representative of management over the workers and the operation of the department. Petitioner's
evidence also showed that
He was the supervisor of the steam plant. 38 His classification as supervisors is further evident from the manner his
salary was paid.
On the basis of the foregoing, the Court finds no justification to award overtime pay and premium pay for rest days
to petitioner.
NOTES:
9. LEYTE IV ELECTRIC COOPERATIVE, INC., petitioner, vs . LEYECO IV Employees Union-ALU,

respondent
PETITIONER: LEYTE IV ELECTRIC COOPERATIVE, RESPONDENT: LEYECO IV

INC. Employees Union-ALU
LAW & PRINCIPLES: This ruling was applied in Wellington Investment and Manufacturing Corporation v.
Trajano, Producers Bank of the Philippines v. National Labor Relations Commission and Odango v. National
Labor Relations Commission, among others.
In Wellington, the monthly salary was fixed by Wellington to provide for compensation for every working
day of the year including the holidays specified by law — and excluding only Sundays. In fixing the salary,
Wellington used what it called the "314 factor"; that is, it simply deducted 51 Sundays from the 365 days
normally comprising a year and used the difference, 314, as basis for determining the monthly salary. The
monthly salary thus fixed actually covered payment for 314 days of the year, including regular and special
holidays, as well as days when no work was done by reason of fortuitous cause, such as transportation
strike, riot, or typhoon or other natural calamity, or cause not attributable to the employees.
In Producers Bank, the employer used the divisor 314 in arriving at the daily wage rate of monthly salaried
employees. The divisor 314 was arrived at by subtracting all Sundays from the total number of calendar
days in a year, since Saturdays are considered paid rest days. The Court held that the use of 314 as a divisor
leads to the inevitable conclusion that the ten legal holidays are already included therein. In the Odango v.
National Labor Relations Commission, the Court ruled that the use of a divisor that was less than 365 days
cannot make the employer automatically liable for underpayment of holiday pay. In said case, the employees
were required to work only from Monday to Friday and half of Saturday. Thus, the minimum allowable divisor
is 287, which is the result of 365 days, less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any
divisor below 287 days meant that the employees were deprived of their holiday pay for some or all of the
ten legal holidays. The 304-day divisor used by the employer was clearly above the minimum of 287 days.
FACTS: On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees Union-ALU
(respondent) entered into a Collective Bargaining Agreement (CBA) 3 covering petitioner rank-and-file employees,
for a period of five (5) years effective January 1, 1998.
Respondent, through its Regional Vice-President, Vicente P. Casilan, sent a letter to petitioner demanding holiday
pay for all employees, as provided for in the CBA.
On June 20, 2000, petitioner, through its legal counsel, sent a letter-reply to Casilan, explaining that after perusing
all available pay slips, it found that it had paid all employees all the holiday pays enumerated in the CBA. The parties
agreed to submit the issues of the interpretation and implementation of Section 2, Article VIII of the CBA on the
payment of holiday pay, for arbitration of the National Conciliation and Mediation Board (NCMB), Regional Office
No. VIII in Tacloban City. The parties were required to submit their respective position papers, after which the
dispute was submitted for decision.
Page 36 of 52
Respondent alleged that it is not prevented from making separate demands for the payment of regular holidays
concomitant with the provisions of the CBA, with its supporting documents consisting of a letter demanding payment
of holiday pay, petitioner's reply thereto and respondent's rejoinder, a computation in the amount of P1,054,393.07
for the unpaid legal holidays, and several pay slips. Petitioner, on the other hand, insisted payment of the holiday
pay in compliance with the CBA provisions, stating that payment was presumed since the formula used in
determining the daily rate of pay of the covered employees is Basic Monthly Salary divided by 30 days or Basic
Monthly Salary multiplied by 12 divided by 360 days, thus with said formula, the employees are already paid their
regular and special days, the days when no work is done, the 51 un-worked Sundays and the 51 un-worked
Saturdays.
Voluntary Arbitrator Antonio C. Lopez, Jr. rendered a Decision in favor of respondent, holding petitioner liable for
payment of unpaid holidays from 1998 to 2000 in the sum of P1,054,393.07. He reasoned that petitioner miserably
failed to show that it complied with the CBA mandate that holiday pay be "reflected during any payroll period of
occurrence" since the payroll slips did not reflect any payment of the paid holidays.
Petitioner filed a Motion for Reconsideration but it was denied by the Voluntary Arbitrator
Petitioner filed a Petition for Certiorari in the CA, ascribing grave abuse of discretion amounting to lack of jurisdiction
to the Voluntary Arbitrator: (a) for ignoring that in said company the divisor for computing the applicable daily rate of
rank-and-file employees is 360 days which already includes payment of 13 un-worked regular holidays under Section
2, Article VIII of the CBA; and (b) for holding the petitioner liable for the unpaid holidays just because the payroll slips
submitted as evidence did not show any payment for the regular holidays. In a Resolution dated September 4, 2002,
the CA dismissed outright petitioner's Petition for certiorari for adopting a wrong mode of appeal. It reasoned that
what is assailed in the present recourse is a Decision of a Voluntary Arbitrator, the proper remedy is a petition for
review under Rule 43 of the 1997 Rules of Civil Procedure.
ISSUES:
(1) The Honorable Court of Appeals erred in rejecting the petition for certiorari under Rule65 of the Rules of
Court filed by herein petitioner to assail the Decision of the Voluntary Arbitrator.
(2) The Voluntary Labor Arbitrator gravely abused its discretion in giving a strict or literal
interpretation of the CBA provisions that the holiday pay be reflected in the payroll
slips.
RULING: 1. No the CA did not err in dismissing the petition. The proper remedy from an award of a voluntary
arbitrator is a petition for review to the CA, following Revised Administrative Circular No. 1-95, which provided for a
uniform procedure for appellate review of all adjudications of quasi-judicial entities, which is now embodied in Section
1, Rule 43 of the 1997 Rules of Civil Procedure.
2. The Voluntary Arbitrator gravely abused its discretion in giving a strict or literal interpretation of the CBA provisions
that the holiday pay be reflected in the payroll slips. Such literal interpretation ignores the admission of respondents
in its Position Paper that the employees were paid all the days of the month even if not worked. In light of such
admission, petitioner's submission of its 360 divisor in the computation of employees' salaries gains significance.
In Union of Filipro Employees v. Vivar, Jr. the Court held that "[t]he divisor assumes an important role in determining
whether or not holiday pay is already included in the monthly paid employee's salary and in the computation of his
daily rate".
This ruling was applied in Wellington Investment and Manufacturing Corporation v. Trajano, Producers Bank of the
Philippines v. National Labor Relations Commission and Odango v. National Labor Relations Commission.
In this case, the employees are required to work only from Monday to Friday. Thus, the minimum allowable divisor
is 263, which is arrived at by deducting 51 unworked Sundays and 51 un-worked Saturdays from 365 days.
Page 37 of 52
Considering that petitioner used the 360-day divisor, which is clearly above the minimum, indubitably, petitioner's
employees are being given their holiday pay.
Thus, the Voluntary Arbitrator should not have simply brushed aside the petitioner's divisor formula. In granting
respondent's claim of non-payment of holiday pay, a "double burden" was imposed upon the petitioner because it
was being made to pay twice for its employees' holiday pay when payment thereof had already been included in the
computation of their monthly salaries. Moreover, it is absurd to grant respondent's claim of non-payment when they
in fact admitted that they were being paid all of the days of the month even if not worked. By granting respondent's
claim, the Voluntary Arbitrator sanctioned unjust enrichment in favor of the respondent and caused unjust financial
burden to the petitioner. Obviously, the Court cannot allow this.
The petition was granted.
NOTES:
10. Bahia Shipping Services v. Chua, GR No. 162195, April 8, 2008 (AMIO)
Bahia Shipping Services Reynaldo Chua,
- an overseas shipping company - hired by Bahia Shipping as a restaurant waiter on

board a luxury cruise ship liner M/S Black Watch with a POEA-
approved contract for a period of 9 months
LAW & PRINCIPLES:
- Article 279 of the Labor Code, as amended, mandates that an illegally dismissed employee is entitled to
the twin reliefs of (a) either reinstatement or separation pay, if reinstatement is no longer viable, and (b) back wages.
Both are distinct reliefs given to alleviate the economic damage suffered by an illegally dismissed employee and,
thus, the award of one does not bar the other. (St. Michael's Institute v. Santos)
- Substantive rights like the award of back wages resulting from illegal dismissal must not be prejudiced by
a rigid and technical application of the rules.
- As a general rule, a party who has not appealed is not entitled to an affirmative relief other than the ones
granted by a lower court. But as an exception, the Court of Appeals is nevertheless imbued with sufficient authority
and discretion to review matters, not otherwise assigned as errors on appeal, if it finds that their consideration is
necessary in arriving at a complete and just resolution of the case or to serve the interests of justice or to avoid
dispensing piecemeal justice. (St. Michael's Institute v. Santos)
- Section 10 of RA 8042 entitles an overseas worker who has been illegally dismissed to “his salaries for the
unexpired portion of the employment contract or for three (3) months for every year of the unexpired term, whichever
is less.”
- In Marsaman Manning Agency, Inc. v. NLRC, the second option which imposes a three-month salary cap
applies only when the term of the overseas contract is fixed at one year or longer; otherwise, the first option applies
in that the overseas worker shall be entitled payment of all his salaries for the entire unexpired period of his contract.
- In Skippers Pacific, Inc. v. Mira, wherein the overseas contract involved was only for six months, the Court
held that it is the first option provided under Section 10 of RA 8042 which is applicable in that the overseas worker
who was illegally dismissed is entitled to payment of all his salaries covering the entire unexpired period of his
contract.
Page 38 of 52
FACTS:
• On October 18, 1996, respondent left Manila for Heathrow, England to board luxury cruise ship liner M/S
Watch where he was assigned to work.
• On February 15, 1997, respondent reported one and one-half hours late for work. Two days later, a warning-
termination form was served to the respondent.
• On March 8, 1997, the ship captain conducted an inquisitorial hearing to investigate the said incident.
• A day later, the respondent was dismissed from on the strength of an unsigned and undated notice of
dismissal. An alleged record or minutes of the said investigation was attached to the said dismissal notice.
• Thereafter, the respondent filed a complaint for illegal dismissal and other monetary claims.
• The Labor Arbiter found that respondent was illegally dismissed and ordered for payment of back wages
representing the unexpired portion of the respondent’s contract of employment limited to three (3) month pursuant
to RA 8042.
• The NLRC affirmed the LA ruling, but deducted one day’s worth of wage from the award of back wages.
• The CA, while also affirming the LA ruling, modified the award of back wages into that representing the
salary for the unexpired portion of the contract, removing the 3-month salary cap.
- Petitioner argues that it requested

permission from the POEA to amend the salary - Respondent alleges that he was underpaid by
scale of the respondent to US$300 per month. US$110 for his monthly salary for 5 months. (US$300 only,
instead of US$410 stipulated in the contract)
- The petitioner justified its monthly
deduction made for union dues against the - Respondent further asserted that his salaries were
respondent's salary in view of an alleged existing also deducted US$20 per month by the petitioner for alleged
CBA between the Norwegian Seaman's Union union dues despite the petitioner not being a member of the
(NSU, for brevity) and the petitioner's principal, AMOSUP or ITF to justify its claim to deduct said union dues.
Blackfriars Shipping Co., Ltd.
- Respondent also argues that it was his first offense
- The petitioner further argued that the
committed on board the vessel.
respondent has violated the terms and conditions
Respondent did not assail the NLRC ruling, deducting one-day
of his contract for always coming late to work.
from his award of back wages.
- Petitioner questions the CA for lifting the
three-month salary cap, pointing out that the LA
and NLRC decisions which imposed the cap can no
longer be altered as said decisions where not
questioned by respondent.
- Petitioner also argues that respondent

should not receive overtime pay as part of the
monetary award since he did not actually render
overtime work for the unexpired period of his
employment contract.
ISSUES:
1. Whether or not reporting for work 1 1/2 hours late is a valid ground for dismissal
2. Whether or not the CA can increase the monetary award despite the respondent not appealing the LA
and NLRC decision
3. Whether or not respondent is entitled to overtime pay
Page 39 of 52
RULING:
1) NO.
Citing the LA, the SC declared the dismissal of respondent illegal for the reason that the infraction he committed of
being tardy by 1 1/2 hours should not have been penalized by petitioner with the ultimate punishment of termination;
rather, the commensurate penalty for such single tardiness would have been suspension for one or two weeks.
Moreover, petitioner meted out on respondent the penalty of dismissal hastily and summarily in that it merely went
through the motions of notifying respondent and hearing his side when, all along, it had already decided to dismiss
him.
Petitioner’s claim that respondent has been habitually late for work is not supported by substantial evidence.
2) YES.
Indeed, a party who has failed to appeal from a judgment is deemed to have acquiesced to it and can no longer
obtain from the appellate court any affirmative relief other that what was already granted under said judgment.
However, when strict adherence to such technical rule will impair a substantive right, such as that of an illegally
dismissed employee to monetary compensation as provided by law, then equity dictates that the Court set aside the
rule to pave the way for a full and just adjudication of the case.
Substantive rights like the award of back wages resulting from illegal dismissal must not be prejudiced by a rigid and
technical application of the rules. The order of the Court of Appeals to
award backwages being a mere legal consequence of the finding that respondents were illegally dismissed by
petitioners, there was no error in awarding the same. (St. Michael's Institute v. Santos)
Section 10 of RA 8042 entitles an overseas worker who has been illegally dismissed to “his salaries for the unexpired
portion of the employment contract or for three (3) months for every year of the unexpired term, whichever is less.”
The CA correctly applied the interpretation of the aforesaid provision in Marsaman Manning Agency, Inc. v. NLRC
that the second option which imposes a three-month salary cap applies only when the term of the overseas contract
is FIXED AT ONE YEAR OR LONGER; otherwise, the first option applies in that the overseas worker shall be entitled
payment of all his salaries for the entire unexpired period of his contract.
3) NO.
Respondent's “guaranteed overtime” pay amounting to US$197 per month should NOT be included as part of his
salary. Petitioner is correct in arguing that after respondent's repatriation, he could not have rendered any overtime
work.
It being improbable that respondent rendered overtime work during the unexpired term of his contract, the inclusion
of his “guaranteed overtime” pay into his monthly salary as basis in the computation of his salaries for the entire
unexpired period of his contract has no factual or legal basis and the same should have been disallowed.
NOTES:
*Arguments in red are not really relevant to Topic 9. Be it enough to say that respondent was illegally dismissed.
The issue relevant to Topic 9 is more focused on the award of backwages granted to the respondent.
11. PNCC Skyway Workers Organization v. PNCC Skyway Corp., GR No. 171231, February 17, 2010
(AMIO)
PNCC SKYWAY CORPORATION
Page 40 of 52
PNCC SKYWAY TRAFFIC MANAGEMENT AND - a corporation duly organized and operating
SECURITY DIVISION WORKERS ORGANIZATION under and by virtue of the laws of the Philippines
(PSTMSDWO)
- a labor union duly registered with the Department

of Labor and Employment (DOLE; represented by
Rene Soriano (president of the workers’ org)
LAW & PRINCIPLES:
- The purpose of a vacation leave is to afford a laborer a chance to get a much-needed rest to replenish his
worn-out energy and acquire a new vitality to enable him to efficiently perform his duties, and not merely to give him
additional salary and bounty. (Cuajo v. Chua Lo Tan)
- The grant of vacation leave is not a standard of law, but a prerogative of management. It is a mere
concession or act of grace of the employer and not a matter of right on the part of the employee. Thus, it is well
within the power and authority of an employer to impose certain conditions, as it deems fit, on the grant of vacation
leaves, such as having the option to schedule the same. (PNCC Skyway Workers’ Org v. PNCC Skyway Corp.)
- Since it is the primary responsibility of operators of company security forces to maintain and upgrade the
standards of efficiency, discipline, performance and competence of their personnel, it follows that the expenses to
be incurred therein shall be for the personal account of the company. (PNCC Skyway Workers’ Org v. PNCC Skyway
Corp, in relation to Sections 12 and 17 of the 1994 Revised Rules and Regulations Implementing Republic 5487)
FACTS:
• Petitioner and respondent entered into a Collective Bargaining Agreement (CBA) incorporating the terms
and conditions of their agreement which included vacation leave and expenses for security license provisions.
• Under the CBA, the company shall schedule the vacation leave of employees during the year taking into
consideration the request of preference of the employees. Any unused vacation leave shall be converted to cash
and shall be paid to the employees on the first week of December each year.
• The same CBA also provided that all the expenses for the required in-service training of the company’s
security guards, as a requirement for the renewal of their license, shall be shouldered by the same security guards.
• The respondent company then published the scheduled vacation leave of its Traffic Management and
Security Department (TMSD) personnel for the year 2004.
• Petitioner contested the scheduling of vacation leaves as well as the non-payment of the respondent
company for the required in-service training of its security guard.
• In view of the disagreement, the petitioner elevated the matter to the DOLE-NCMB for preventive mediation.
For failure to settle the issue amicably, the parties agreed to submit the issue before the voluntary arbitrator.
• The voluntary arbitrator ruled in favor of the petitioner.
• But the CA annulled the decision of the voluntary arbitrator. It ruled that since the provisions of the CBA
were clear, the voluntary arbitrator has no authority to interpret the same beyond what was expressly written.
- Petitioner insists the individual members of - Respondent argued that Article VIII, Section 1 (b)
the union have the right to schedule their vacation of the CBA gives the management the final say regarding
leave. It opined that the unilateral scheduling of the the vacation leave schedule of its employees. Respondent
employees' vacation leave was done to avoid the may take into consideration the employees' preferred
monetization of their vacation leave in December 2004. schedule, but the same is not controlling.
- Petitioner also demanded that the expenses - Respondent did not accede to the union's request
for the required in-service training of its member invoking the CBA provision which states that all expenses
security guards, as a requirement for the renewal of of security guards in securing/renewing their license shall
their license, be shouldered by the respondent. be for their personal account. (Respondent is mum on
defending this CBA provision.)
Page 41 of 52
- The petitioner further argued that any doubts

or ambiguity in the interpretation of the CBA should be
resolved in favor of the laborer.
ISSUES:
1. Whether or not the CBA provision on scheduling of vacation leave valid
2. Whether or not the company can require its security personnel to shoulder the expenses for their in-service training
by invoking the CBA provision on the same
RULING:
1. YES.
In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII, Section 1 (b) of the CBA
categorically provides that the scheduling of vacation leave shall be under the option of the employer. The preference
requested by the employees is not controlling because respondent retains its power and prerogative to consider or
to ignore said request.
Thus, if the terms of a CBA are clear and leave no doubt upon the intention of the contracting parties, the literal
meaning of its stipulation shall prevail. In fine, the CBA must be strictly adhered to and respected if its ends have to
be achieved, being the law between the parties.
Quoting the CA, the SC held:
“There is, thus, no basis for the Voluntary Arbitrator to interpret the subject provision relating to the schedule of
vacation leaves as being subject to the discretion of the union members. There is simply nothing in the CBA which
grants the union members this right.
It must be noted the grant to management of the right to schedule vacation leaves is not without good reason.
Indeed, if union members were given the unilateral discretion to schedule their vacation leaves, the same may result
in significantly crippling the number of key employees of the petitioner manning the toll ways on holidays and other
peak seasons, where union members may wittingly or unwittingly choose to have a vacation. Put another way, the
grant to management of the right to schedule vacation leaves ensures that there would always be enough people
manning and servicing the toll ways, which in turn assures the public plying the same orderly and efficient toll way
service.”
Since the grant of vacation leave is a prerogative of the employer, the latter can compel its employees to exhaust all
their vacation leave credits. Of course, any vacation leave credits left unscheduled by the employer, or any scheduled
vacation leave that was not enjoyed by the employee upon the employer's directive, due to exigencies of the service,
must be converted to cash, as provided in the CBA.
2. NO. The CBA provision is void for being contrary to law.
Although it is a rule that a contract freely entered into between the parties should be respected, since a contract is
the law between the parties, there are, however, certain exceptions to the rule, specifically Article 1306 of the Civil
Code, which provides:
“The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.”
If the provisions in the CBA run contrary to law, public morals, or public policy, such provisions may very well be
voided. In the present case, Article XXI, Section 6 of the CBA provides that all expenses of security guards in
securing/renewing their licenses shall be for their personal account. A reading of the provision would reveal that it
encompasses all possible expenses a security guard would pay or incur in order to secure or renew his license. In-
service training is a requirement for the renewal of a security guard's license. Hence, following the aforementioned
CBA provision, the expenses for the same must be on the personal account of the employee.
Page 42 of 52
However, the 1994 Revised Rules and Regulations Implementing Republic 5487 provides otherwise; this can seen
in its provision on pro-rating.
“Where the quality of training is better served by centralization, the CSFD Directors may activate a training staff from
local talents to assist. The cost of training shall be pro-rated among the participating agencies/private companies.”
The law mandates pro-rating of expenses among companies/agencies because it would be impracticable and unfair
to impose the burden of expenses suffered by all participants on only one participating agency or company. If the
intent of the law were to impose upon individual employees the cost of training, the provision on the prorating of
expenses would not have found print in the law.
Further, petitioner alleged that prior to the inking of the CBA, it was the respondent company providing for the in-
service training of the guards. Respondent never controverted the said allegation and is thus deemed to have
admitted the same. Implicit from respondent's actuations was its acknowledgment of its legally mandated
responsibility to shoulder the expenses for in-service training.
NOTES:
*The union president, representing the union, was clothed with sufficient authority to sign the verification and
certification against forum shopping for the following reasons:
First, the resolution dated June 30, 2006 was merely a reiteration of the authority given to the Union President to file
a case before this Court assailing the CBA violations committed by the management, which was previously conferred
during a meeting held on October 5, 2005. Thus, it can be inferred that even prior to the filing of the petition before
the SC on February 27, 2006, the president of the union was duly authorized to represent the union and to FIle a
case on its behalf.
Second, being the president of the union, Rene Soriano is in a position to verify the truthfulness and correctness of
the allegations in the petition.
Third, assuming that Mr. Soriano has no authority to FIle the petition on February 27, 2006, the passing on June 30,
2006 of a Board Resolution authorizing him to represent the union is deemed a ratification of his prior execution, on
February 27,2006, of the verification and certificate of non-forum shopping, thus curing any defects thereof.
Ratification in agency is the adoption or confirmation by one person of an act performed on his behalf by another
without authority to file the petition on February 27, 2006.
12. Radio Mindanao Network Inc. et. al.., vs Ybarola, Jr.GR No 198662, Sept. 12, 2012 (MOLINA)
PETITIONER: Radio Mindanao Network Inc. and Eric RESPONDENT: Domingo Z. Ybarola, Jr. and Alfonso
S. Canoy E. Rivera, Jr.
LAW & PRINCIPLES: Guaranteed wages and Commissions - a salary structure does not detract from the character
of the commissions being part of the salary or wage paid to the employees for services rendered to the company.
FACTS:
Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15, 1977 and June 1, 1983,
respectively, by Radio Mindanao Network Inc. (RMN). They eventually became account managers, soliciting
advertisements and servicing various clients of RMN. On September 15, 2002, the respondents’ services were
terminated as a result of RMN’s reorganization/restructuring; they were given their separation pay – P 631,250.00
for Ybarola, and P 481,250.00 for Rivera. Sometime in December 2002, they executed release/quitclaim affidavits.
Dissatisfied with their separation pay, the respondents filed separate complaints (which were later consolidated)
against RMN and its President, Eric S. Canoy, for illegal dismissal with several money claims, including attorney’s
fees. The respondents argued that the release/quitclaim they executed should not be a bar to the recovery of the full
benefits due them; while they admitted that they signed release documents, they did so due to dire necessity. On
Page 43 of 52
July 18, 2007, Labor Arbiter Patricio Libo-on dismissed the illegal dismissal complaint, but ordered the payment of
additional separation pay to the respondents.
The labor arbiter adjusted the separation pay award based on the respondents’ Certificates of Compensation
Payment/Tax Withheld. On appeal by the petitioners to the National Labor Relations Commission (NLRC), it ruled
that the withholding tax certificate cannot be the basis of the computation of the respondents’ separation pay as the
tax document included the respondents’ cost-of-living allowance and commissions; as a general rule, commissions
cannot be included in the base figure for the computation of the separation pay because they have to be earned by
actual market transactions attributable to the respondents, as held by the Court in Soriano v. NLRC7 and San Miguel
Jeepney Service v. NLRC. From the NLRC, the respondents sought relief from the CA through a petition for certiorari
under Rule 65 of the Rules of Court. In its decision of February 17, 2011, the CA granted the petition and reinstated
the labor arbiter’s separation pay award. Hence, this petition for motion for reconsideration.
ARGUMENTS SECTION
The respondents argued that the release/quitclaim they executed should not be a bar to the recovery of the full
benefits due them; while they admitted that they signed release documents, they did so due to dire necessity.
The petitioners denied liability, contending that the amounts the respondents received represented a fair and
reasonable settlement of their claims, as attested to by the release/quitclaim affidavits which they executed freely
and voluntarily.
The Motion for Reconsideration

The petitioners point out that in this case, the labor arbiter and the NLRC correctly concluded that the respondents
are hardly unlettered employees, but intelligent, well-educated and who were too smart to be caught unaware of
what they were doing. They stress, too, that the respondents submitted no proof that they were in dire circumstances
when they executed the release/quitclaim document.
The Respondent’s Position

They argue that the motion is based on arguments already raised in the petition for review which had already been
denied by this Court.
They maintain that as the records show, the petitioners failed to raise the issue in their appeal to the NLRC and
neither did they bring it up in their motion for reconsideration of the CA’s decision reinstating the labor arbiter’s
award.
The Petitioner’s Reply

The petitioners ask that their petition be reinstated to allow the full ventilation of the issues presented for
consideration. They contend that the respondents merely reiterated the CA pronouncements and have not
confronted the issues raised and the jurisprudence they cited.
The petitioners denied liability, contending that the The respondents argued that the release/quitclaim they
amounts the respondents received represented a fair and executed should not be a bar to the recovery of the full
reasonable settlement of their claims, as attested to by the benefits due them; while they admitted that they signed
release/quitclaim affidavits which they executed freely and release documents, they did so due to dire necessity.
voluntarily.
ISSUES:
Whether or not the CA committed reversible error in : (1) failing to declare that Canoy is not personally liable in the
present case; (2) disregarding the rule laid down in Talam v. National Labor Relations Commission on the proper
appreciation of quitclaims; and (3) disregarding prevailing jurisprudence which places on the respondents the burden
of proving that their commissions were earned through actual market transactions attributable to them.
RULING:
The motion for reconsideration is unmeritorious. The motion raises substantially the same arguments presented in
the petition. The petitioner’s contention that respondent’s commissions are profit-sharing payments which do not
Page 44 of 52
form part of their salaries is untenable. That the salary structure of the respondents was such that they only received
a minimal amount as guaranteed wage; a greater part of their income was derived from the commissions they get
from soliciting advertisements; these advertisements are the "products" they sell. As the CA aptly noted, this kind of
salary structure does not detract from the character of the commissions being part of the salary or wage paid to the
employees for services rendered to the company.
The petitioners’ reliance on our ruling in Talam v. National Labor Relations Commission,17 regarding the "proper
appreciation of quitclaims," as they put it, is misplaced. In this case, as the CA noted, the separation pay the
respondents each received was deficient by at least P 400,000.00; thus, they were given only half of the amount
they were legally entitled to. To be sure, a settlement under these terms is not and cannot be a reasonable one,
given especially the respondents’ length of service – 25 years for Ybarola and 19 years for Rivera.
Lastly, the petitioners are estopped from raising the issue of Canoy's personal liability. They did not raise it before
the NLRC in their appeal from the labor arbiter's decision, nor with the CA in their motion for reconsideration of the
appellate court's judgment.
NOTES:
As the CA aptly noted, this kind of salary structure does not detract from the character of the commissions being
part of the salary or wage paid to the employees for services rendered to the company, as the Court held in Philippine
Duplicators, Inc. v. NLRC.
13. Robina Farms Cebu vs Villa, GR No 175869, April 18, 2016 (MOLINA)
ROBINA FARMS CEBU/UNIVERSAL ROBINA ELIZABETH VILLA, Respondent

CORPORATION, Petitioner
LAW & PRINCIPLES:
Section 4. Principles in determining hours worked. – The following general principles shall govern in determining
whether the time spent by an employee is considered hours worked for purposes of this Rule:
(a) x x x.
(b) x x x.
(c) If the work performed was necessary, or it benefited the employer, or the employee could not abandon his work
at the end of his normal working hours because he had no replacement, all time spent for such work shall be
considered as hours worked, if the work was with the knowledge of his employer or immediate supervisor.
FACTS:
Respondent Elizabeth Villa brought against the petitioner her complaint for illegal suspension, illegal dismissal,
nonpayment of overtime pay, and nonpayment of service incentive leave pay in the Regional Arbitration Branch No.
VII of the NLRC in Cebu City.
In her verified position paper, Villa averred that she had been employed by petitioner Robina Farms as sales clerk
since August 1981; that in the later part of 2001, the petitioner had enticed her to avail herself of the company's
special retirement program; that on March 2, 2002, she had received a memorandum from Lily Ngochua requiring
her to explain her failure to issue invoices for unhatched eggs in the months of January to February 2002; that she
had explained that the invoices were not delivered on time because the delivery receipts were delayed and
overlooked; that despite her explanation, she had been suspended for 10 days from March 8, 2012 until March 19,
2002; that upon reporting back to work, she had been advised to cease working because her application for
retirement had already been approved; that she had been subsequently informed that her application had been
disapproved, and had then been advised to tender her resignation with a request for financial assistance; that she
had manifested her intention to return to work but the petitioner had confiscated her gate pass; and that she had
since then been prevented from entering the company premises and had been replaced by another employee.
The petitioner admitted that Villa had been its sales clerk at Robina Farms. It stated that her attention had been
called by the accounting department to explain her failure to issue invoices for the unhatched eggs for the month of
Page 45 of 52
February; After the administrative hearing Villa was found to have violated the company rule on the timely issuance
of the invoices that had resulted in delay in the payment of buyers considering that the payment had depended upon
the receipt of the invoices; that she had been suspended from her employment as a consequence; that after serving
the suspension, she had returned to work and had followed up her application for retirement with Lucina de Guzman,
who had then informed her that the management did not approve the benefits equivalent to 86% of her salary rate
applied for, but only 1/2 month for every year of service; and and that disappointed with the outcome, she had then
brought her complaint against the petitioners.
The Labor Arbiter Violeta Ortiz-Bantug rendered her Decision4 finding that Villa had not been dismissed from
employment. The NLRC rendered its judgment dismissing the appeal by the petitioner but granting that of Villa. CA
upheld the finding of the NLRC that the petitioner had illegally dismissed Villa.
ARGUMENTS SECTION:
● The petitioner prays that Villa's appeal should be treated as an unsigned pleading because she had
accompanied her appeal with the same verification attached to her position paper.
● The petitioner next submits that the CA erred in holding that Villa had been illegally dismissed; that it had
no intention to terminate her; that de Guzman had merely suggested to her that she should be filing the
letter of resignation with the request for financial assistance because the management had disapproved
her application for the 86% salary rate as basis for her retirement benefits; that it was Villa who had the
intention to sever the employer-employee relationship because she had kept on following up her application
for retirement; that she had prematurely filed the complaint for illegal dismissal; that she had voluntarily
opted not to report to her work; and that she had not presented proof showing that it had prevented her
from working and entering its premises.
Respondent signified her intention to return back to
The petitioner admitted that Villa had been its sales clerk work after learning of the disapproval of her application,
at Robina Farms. It stated that on December 12, 2001, she was prevented from entering the petitioner's
she had applied for retirement under the special privilege premises by confiscating her ID and informing her that
program offered to its employees in Bulacan and Antipolo a new employee has already replaced her.
who had served for at least 10 years; that in February
2002, her attention had been called by Anita Gabatan of Villa's application for early retirement did not manifest
the accounting department to explain her failure to issue her intention to sever the employer-employee
invoices for the unhatched eggs for the month of February. relationship. Although she applied for early retirement,
she did so upon the belief that she would receive a
The petitioner added that after the administrative hearing higher benefit based on the petitioner's offer. As such,
Villa was found to have violated the company rule on the her consent to be retired could not be fairly deemed to
timely issuance of the invoices that had resulted in delay have been knowingly and freely given.
in the payment of buyers considering that the payment had
depended upon the receipt of the invoices.
ISSUES:
1. Was Villa illegally dismissed?
2. Was Villa entitled to overtime pay and SIL pay?
RULING:
(1) Yes, the private respondent was illegally dismissed.

It is undeniable that the private respondent was suspended for ten (10) days. Ordinarily, after an employee served
her suspension, she should be admitted back to work and to continue to receive compensation for her services. In
the case at the bar, it is clear that the private respondent was not admitted immediately after her suspension. When
she reported back after her suspension, she was advised not to report back anymore as her application was
approved, which was later on disapproved. She was then advised to tender a resignation letter with request for
financial assistance by Lucy de Guzman. After that another letter of petitioner Lily Ngochua advised the private
respondent to do the same. Clearly, these acts are a strong indication that petitioners wanted to severe the employer-
employee relationship between them and that of a private respondent. This is buttressed by the fact that when the
private respondent signified her intention to return back to work after learning of the disapproval of her application,
she was prevented to enter the petitioner's premises by confiscating her ID and informing her that a new employee
has already replaced her.
Page 46 of 52
Moreover, the private respondent’s application for early retirement did not manifest her intention to sever the
employer-employee relationship. Although she applied for early retirement, she did so upon the belief that she would
receive a higher benefit based on the petitioner's offer. As such, her consent to be retired could not be fairly deemed
to have been knowingly and freely given.
(2) Private Respondent is entitled to SIL pay but not to overtime payment
OVERTIME PAYMENT
Firstly, entitlement to overtime pay must first be established by proof that the overtime work was actually performed
before the employee may properly claim the benefit. The burden of proving entitlement to overtime pay rests on the
employee because the benefit is not incurred in the normal course of business. And, secondly, the NLRC's reliance
on the daily time records (DTRs) showing that Villa had stayed in the company's premises beyond eight hours was
misplaced. The DTRs did not substantially prove the actual performance of overtime work. An employee could render
overtime work only when there was a prior authorization therefore by the management. Without the prior
authorization, therefore, Villa could not validly claim having performed work beyond the normal hours of work.
SERVICE INCENTIVE LEAVE PAY

The Labor Arbiter originally awarded the SIL pay because the petitioner did not present proof showing that Villa had
been justly paid. The petitioner submitted the affidavits of Zanoria explaining the payment of service incentive leave
after the Labor Arbiter had rendered her decision. But that was not enough, for evidence should be presented in the
proceedings before the Labor Arbiter, not after the rendition of the adverse decision by the Labor Arbiter or during
appeal. Such a practice of belated presentation cannot be tolerated because it defeats the speedy administration of
justice in matters concerning the poor worker.
NOTES:
14. Dasco v. Philtranco Service Enterprises, Inc., G.R. No. 211141, June 29, 2016
Hilario Dasco, Reymir Parafina, Edilberot Ania, Michael PHILTRANCO Service Enterprises, Inc. and Centurion
Adan, Jaime Bolo, Ruben Gula, Antonio Cuaderno and Solano
Jovito Catangui
PHILTRANCO is a domestic corporation that engages in
public utility transportation.
Centurion Solano is the manager.
LAW & PRINCIPLES:

Regular employees are entitled to benefits which include overtime pay and SIL.
FACTS:
● This case is a complaint for regularization, underpayment of wages, non-payment of service incentive leave
(SIL) pay, fees, filed by the petitioners against the respondent.
● On various dates from 2006 to 2010, the petitioners were employed by the respondents as bus drivers
and/or conductors with travel routes from Manila (Pasay) to Bicol, Visayas and Mindanao, and vice versa.
● Petitioner entrenched 21 of its employees on the ground that it was suffering business losses.
● Private Respondent Union filed a notice of strike with DOLE claiming that the petitioner engaged in unfair
labor practice.
Labor Arbiter: In favor of the respondents but declared the petitioners as regular employees of the respondents. The
LA held that the respondents were able to prove that the petitioners were paid on a fixed salary of P0.49 per kilometer
run, or minimum wage, whichever is higher. The LA also found that the petitioners are not entitled to holiday pay
and SIL pay because they are considered as field personnel.
NLRC: Held that the petitioners are not field personnel considering that they ply specific routes with fixed time
schedules determined by the respondents; thus, they are entitled to minimum wage, SIL pay, and overtime benefits.
With regard to the respondents' claim that the petitioners have a fixed term contract, the NLRC concurred with the
Page 47 of 52
findings of the LA that the respondents failed to show any document, such as employment contracts and employment
records, that would show the dates of hiring, as well as the fixed period agreed upon.
CA: Reversed and set aside the NLRC rulings and reinstated the LA's decision. Consequently, the writ of execution,
levy, auction sale and certificate of sale of PSEI's properties were declared null and void. The petitioners and the
NLRC Sheriff were directed to return the subject properties or turn over the monetary value thereof to the
respondents.
ARGUMENTS SECTION
PETITIONER: RESPONDENT: (Counter-argument)

● They were already qualified for regular ● The petitioners were paid a fixed salary rate of
employment status since they have been P0.49 centavos per kilometer run, or minimum
working with the respondents for several years. wage, whichever is higher.
● They were paid only P404.00 per round trip, ● The petitioners are seasonal employees since
which lasts from two to five days, without their contracts are for a fixed period and their
overtime pay and below the minimum wage rate. employment was dependent on the exigency
● They cannot be considered as field personnel of the extraordinary public demand for more
because their working hours are controlled by the buses during peak months of the year.
respondents from dispatching to end point and ● The petitioners are not entitled to overtime pay
their travel time is monitored and measured by and SIL pay because they are field personnel
the distance because they are in the business of whose time outside the company premises
servicing passengers where time is of the cannot be determined with reasonable
essence. certainty since they ply provincial routes and
● They had not been given their yearly five-day SIL are left alone in the field unsupervised.
since the time they were hired by the
respondents.
ISSUE: WON the petitioners are field personnel, and are thus entitled to overtime pay and SIL pay.
RULING:
No. Petitioners are NOT field workers but regular employees who perform tasks usually necessary and desirable to
the respondents’ business.
A field personnel is not merely concerned with the location where he regularly performs his duties but also with the
fact that the employee's performance is unsupervised by the employer.
Field personnels are those who regularly perform their duties away from the principal place of business of the
employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order
to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the
field can be determined with reasonable certainty by the employer.
Petitioners, as bus drivers and/or conductors, are left alone in the field with the duty to comply with the conditions of
the respondents' franchise, as well as to take proper care and custody of the bus they are using. Since the
respondents are engaged in the public utility business, the petitioners, as bus drivers and/or conductors, should be
considered as regular employees of the respondents because they perform tasks which are directly and necessarily
connected with the respondents' business. Thus, they are consequently entitled to the benefits accorded to regular
employees of the respondents, including overtime pay and SIL pay.
NOTES: This is where they got their definition of a field personnel.
The case of Auto Bus Transport Systems, Inc. v. Bautista the court explains that:
“As a general rule, [field personnel] are those whose performance of their job/service is not supervised by the
employer or his representative, the workplace being away from the principal office and whose hours and days of
work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific
service or performing specific work. If required to be at specific places at specific times, employees including drivers
cannot be said to be field personnel despite the fact that they are performing work away from the principal office of
the employee…”
Page 48 of 52
15. HSY Marketing Ltd., Co. v. Villastique, G.R. No. 219569, August 17, 2016
PETITIONER: HSY Marketing Ltd., Co. RESPONDENT: Virigilio O. Villastique
He is a field driver for Fabulous Jeans & Shirt & General

Merchandise tasked to deliver ready-to-wear items
and/or general merchandise for a daily compensation of
P370.00.
LAW & PRINCIPLES:

Service incentive leave is a right which accrues to every employee who has served 'within 12 months, whether
continuous or broken reckoned from the date the employee started working, including authorized absences and paid
regular holidays unless the working days in the establishment as a matter of practice or policy, or that provided in
the employment contracts, is less than 12 months, in which case said period shall be considered as one (1) year.
Separation pay is a legal consequence for illegal dismissal where reinstatement is no longer viable or feasible.
Separation pay must be given to the employee only as an alternative to reinstatement emanating from illegal
dismissal. When there is no illegal dismissal, even if the relations are strained, separation pay has no legal basis.
FACTS:
● Respondent hit a pedestrian.
● Fabulous Jeans shouldered the hospitalization and medical expenses of the pedestrian for the amount of
P64,157.15.
● The respondent was asked to reimburse the company but refused.
● The respondent was required to sign a resignation letter which he refused.
● He tried to collect his salary for that week but was told that it was withheld because of his refusal to resign.
● He filed a complaint for illegal dismissal as well as money claims.
● Labor Arbiter’s Ruling: Dismissed the charge of illegal dismissal.
● NLRC Ruling: There was no illegal dismissal to speak of, stressing the failure of respondent to discharge
the burden of proof, which shifted to him when his employer denied having dismissed him. There was no
evidence of deliberate or unjustified refusal on the part of respondent to resume his employment, or of overt
acts unerringly pointing to the fact that respondent did not want to work anymore.
● CA Ruling: sustained the LA and NLRC ruling. It added that the respondent cant be reinstated due to
resentment and enmity between the 2 parties.
ARGUMENTS SECTION
PETITIONER: RESPONDENT: (Counter-argument)

● Respondent committed several violations ● He was illegally dismissed.
● Respondent was found by his superiors as a ● He was not paid his benefits and back wages
negligent and reckless driver ● He should be reinstated.
● Respondent was the one who refused to work.
He should be considered to voluntarily terminate
his employment so the money claims cannot
prosper.
ISSUES:
1. WON an employer-employee relationship existed.
2. WON the respondent voluntarily resigned.
3. WON respondent is a regular employee.
RULING:
1. Yes. There was an employer-employee relationship. In the petitioner's own Position Paper they declared
respondent to be a field driver. The petitioner should be bound to their admission and shouldn’t be allowed
to continue to deny such.
Page 49 of 52
2. No. There is no abandonment or dismissal to speak of so the appropriate action is to reinstate the employee
without the payment of back wages. There was no evidence to show that respondent was dismissed or was
prevented from returning to work by petitioners. There must be an overt act to prove the respondent's claim.
Liability for the payment of separation pay is but a legal consequence of illegal dismissal where
reinstatement is no longer viable or feasible. This is because an employee who had not been dismissed,
much less illegally dismissed, cannot be reinstated. As there is no reinstatement to speak of, the respondent
cannot invoke the doctrine of strained relations.
3. Yes. Respondent is a regular employee and is entitled to SIL. Respondent is not a field personnel, as
defined by the nature of his job. Respondent is directed to deliver the goods at a specified time and place
and he is not given the discretion to solicit, select, and contact prospective clients. company drivers who
are under the control and supervision of management officers are regular employees entitled to benefits
including service incentive leave pay.
NOTES:
16. De La Salle Araneta University v. Bernardo, G.R. No. 190809, February 13, 2017
PETITIONER: De La Salle Araneta University RESPONDENT:Juanito C. Bernardo
It is a non-stock, non-profit educational A part-time professional lecturer at the Graduate School of De La

institution duly organized under Philippine Salle Araneta University teaching Recent Advances in Animal
laws. Nutrition.
Dr. Bautista was its Executive Vice-President.
LAW & PRINCIPLES:

Article 302 - Any employee may be retired upon reaching the retirement age established in the collective bargaining
agreement or other applicable employment contract.
RA 7641 or the Retirement Pay Law shall apply to all employees in the private sector, regardless of their position,
designation or status and irrespective of the method by which their wages are paid. They shall include part-time
employees, employees of service and other job contractors and domestic helpers or persons in the personal service
of another.
Article 291- All money claims arising from employer-employee relations accruing during the effectivity of this Code
shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall forever be barred.
FACTS:
● Bernardo then took a leave of absence because he was assigned by the Philippine Government to work in
Papua New Guinea.
● 1977 – He resumed teaching at DLS-AU until 2003.
● His contract was renewed every start of the semester and summer.
● November 2003 – DLS-AU informed Bernardo (already 75 years old) that he could no longer teach at the
school anymore by reason of implementing the retirement age limit for their faculty members.
● Bernard had no other choice but to retire but prior to his retirement he was being paid at an hourly rate of
P246.50.
● He sought advice from DOLE for his entitlement of retirement benefits and the latter opined that respondent
was entitled to receive benefits under RA 7641 or the “New Retirement Law”, and its Implementing Rules
and Regulations.
● Dr. Bautista, in a letter, stated that Bernardo was not entitled to receive any kind of separation pay or
benefits.
● Respondent and Dr. Bautista’s reasons:
○ DLSU-AU’s CBA states that only full-time permanent faculty for at least five (5) years immediately
preceding termination could avail of the post-employment benefits.
○ Bernardo was only a part-time faculty member and the contract was for a fixed term.
○ Bernardo then filed a complaint for non-payment of retirement benefits and damages against DLS-
AU and Dr. Bautista.
Page 50 of 52
● Labor Arbiter: Dismissed the complaint and ruled that the claim for retirement benefits/pay is already barred
by prescription because he should have sought the payment of such benefits/pay within three (3) years
from such time but instead, he belatedly sought the payment of his retirement benefits/pay when he filed
the complaint only ten (10) years after his cause of action accrued. For failure to do so, his claim for the
retirement benefits should be forfeited.
● NLRC: Reversed the Labor Arbiter's ruling and stated that Bernardo filed his complaint for retirement
benefits on time since DLS-AU and Dr. Bautista knew that Bernardo already reached the compulsory age
of retirement of 65 years old, they still extended Bernardo's employment. Thus, Bernardo's cause of action
for payment of his retirement benefits accrued only on November 8, 2003, when he was informed by DLS-
AU that his contract would no longer be renewed and he was deemed separated from employment.
The principle of estoppel was also applicable against DLS-AU and Dr. Bautista who could not validly claim
prescription when they were the ones who permitted Bernardo to work beyond retirement age. As to
Bernardo's entitlement to retirement benefits, the NLRC held untenable the contention that Bernardo is not
entitled to retirement benefits under Republic Act No. 7641 since he is just a part time employee. The
retirement law does not exclude a part time employee from enjoying the retirement benefit as the Republic
Act explicitly states “all employees in the private sector, regardless of their position, designation, or status,
and irrespective of the method by which their wages are paid” with the only exceptions are employees
covered by the Civil Service Law; domestic helpers and persons in the personal service of another; and
employees in retail, service and agricultural establishments or operations regularly employing not more
than ten employees. Clearly, Bernardo does not fall under any of the exceptions. NLRC also commented
that the retirement law should be construed liberally in favor of the employee, and all doubts as to the intent
of the laws should be resolved in favor of the retiree to achieve its humanitarian purpose.
● DLS-AU then filed a petition for certiorari and prohibition before the Court of Appeals. However, the CA
dismissed the petition for lack of merit and reaffirmed the decision of the NLRC.
ARGUMENTS SECTION
PETITIONER: RESPONDENT: (Counter-Argument)

● He should be entitled to retirement ● DLSU-AU’s CBA states that only full-time permanent
benefits under RA 7641. faculty for at least five (5) years immediately preceding
● The prescriptive period has not yet termination could avail of the post-employment benefits.
expired when he turned 65 years old ● Bernardo was only a part-time faculty member and the
but only upon termination of his contract was for a fixed term.
contract (when he was already 75 ● Bernardo then filed a complaint for non-payment of
years old). retirement benefits and damages against DLS-AU and Dr.
Bautista.
ISSUES:
1. WON part-time employees are excluded from the coverage of those entitled to retirement benefits under
Republic Act No. 7541.
2. Whether or not a claim for retirement benefits filed beyond the period provided for under Art. 291 of the
Labor Code has prescribed.
RULING:
1. No, Art. 302 (287) of the Labor Code as amended by RA 7641 or the Retirement Pay Law provides that
“Any employee may be retired upon reaching the retirement age established in the collective bargaining
agreement or other applicable employment contract.” The only exceptions are those working in the retail,
service and agricultural establishments or operations employing not more than ten (10) employees or
workers are exempted from the coverage. As a part-time employee with fixed-term employment, Bernardo
is entitled to retirement benefits.
2. No. Bernardo filed his complaint with the NLRC on February 26, 2004, and was deemed filed within the
three-year prescriptive period. The court ruled that Bernardo's cause of action for his retirement benefits
has not yet been prescribed and it only accrued upon his termination because of his extended employment
with DLS-AU beyond the compulsory retirement age. Bernardo's cause of action for his retirement benefits
only accrued after DLS-AU refused to pay him such benefits as clearly expressed in Dr. Bautista's letter
dated February 12, 2004. Thus, Bernardo's complaint with the NLRC on February 26, 2004, was deemed
filed within the three-year prescriptive period.
Page 51 of 52
NOTES:
His initial hourly rate: P20.00
Hourly rate before retirement: P246.50
Page 52 of 52

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LABOR 1 | JMM | CASE DIGESTS 2020 – TOPICS 7-9

TOPIC 7: PAYMENT OF WAGES

1. Congson vs. NLRC, 243 SCRA 260 [1995]

PETITIONER: DOMINICO C. CONGSON RESPONDENT: NLRC, The employees

LAW & PRINCIPLES:

ISSUE: Whether the means of payment of wages is valid

RULING: The means of payment of wage is invalid.

The Labor Code expressly provides:

2. North Davao Mining vs. NLRC, 254 SCRA 721 [1996]

PETITIONER: NORTH DAVAO MINING RESPONDENT: NATIONAL LABOR RELATIONS

PETITIONER: House of Sara Lee RESPONDENT: Cynthia F. Rey

LAW & PRINCIPLES:

Rank-and-file employees are not entitled to thirteenth-month pay.

The case originated from a Complaint for illegal dismissal.

TOPIC 8: CONDITIONS OF EMPLOYMENT

LAW & PRINCIPLES:

Franklin Drilon’s Interpretation:

ARGUMENTS SECTION (Please indicate who had the ‘COUNTER-ARGUMENT’)

PETITIONER: San Juan De Dios Hospital Employees RESPONDENT:

Counter -argument for unfavorable response of

The interpretation of Labor Secretary Drilon is not valid.

LAW & PRINCIPLES:

3. PAL V. NLRC, G.R. No. 132805. February 2, 1999 (ANDRIN)

PETITIONER: PAL RESPONDENT: NATIONAL LABOR RELATIONS

LAW & PRINCIPLES:

ARGUMENTS SECTION (Please indicate who had the ‘COUNTER-ARGUMENT’)

PETITIONER: RESPONDENT: NO C-A

1. GADALEJ – on nullifying 3 month suspension

3. Dr. Fabros is a full-time employee. Thus, he is

PETITIONER: RESPONDENT: 68 workers of Linton illegally dismissed

LAW & PRINCIPLES:

ARGUMENTS SECTION (Please indicate who had the ‘COUNTER-ARGUMENT’)

c. since there was no retrenchment, the

PETITIONER: BISIG MANGGAGAWA SA TRYCO RESPONDENT: NATIONAL LABOR RELATIONS

LAW & PRINCIPLES:

ARGUMENTS SECTION (Please indicate who had the ‘COUNTER-ARGUMENT’)

1. W/N transfer orders amount to a constructive dismissal.

Memorandum of Agreement (May 20, 1996)

PETITIONER: HILARIO DASCO, REYMIR PARAFINA, RESPONDENT: PHILTRANCO SERVICE

● Filed a complaint for regularization,

LAW & PRINCIPLES:

CA RULING: (August 30, 2013) – reversed NLRC ruling, reinstated LA ruling

ARGUMENTS SECTION (Please indicate who had the ‘COUNTER-ARGUMENT’)

xxx xxx xxx

PETITIONER: HSY Marketing Ltd. RESPONDENT: Virgilio Villastique

LAW & PRINCIPLES:

ARGUMENTS SECTION (Please indicate who had the ‘COUNTER-ARGUMENT’)

PETITIONER: HSY Marketing Ltd. RESPONDENT: Virgilio Villastique

HSY Marketing Ltd.

On the existence of employer-employee relationship:

Existence of employer-employee relationship in company Practice of setting up distributors or dealers:

8. A. Nate Casket Maker v Arango, G.R. No. 192282, Oct. 5, 2016

LAW & PRINCIPLES:

ARGUMENTS SECTION (Please indicate who had the ‘COUNTER-ARGUMENT’)

ISSUES: Whether or not A. Nate Casket Maker is guilty of illegal dismissal

On being entitled to security of tenure:

On reinstatement and the grant of backwages:

TOPIC 9: MINIMUM LABOR STANDARD BENEFITS

LAW & PRINCIPLES:

ARGUMENTS SECTION (Please indicate who had the ‘COUNTER-ARGUMENT’)

Art. 170. Provinces and cities where officially observed–

2. Tan vs. Lagrama

PETITIONER: Rolando Y. Tan RESPONDENT: Leovigildo Lagrama

LAW & PRINCIPLES: